Sears CEO Lampert buys some of company's debt: sources

Mon Mar 28, 2016 7:22pm EDT
 
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By Jessica DiNapoli and Kristen Haunss

(Reuters) - Sears Holdings Corp (SHLD.O: Quote) Chief Executive Eddie Lampert has acquired a portion of the company's new $750 million loan in his latest bet on the parent of Sears department stores and Kmart discount shops, people familiar with the matter said.

The loan helps Sears pay down some of its older debt at a time when shoppers are moving away from malls in favor of Internet shopping and the company, which has lost more than $8 billion over the last five years, sees its sales plummet.

Lampert, whose net worth is pegged by Forbes at $2.4 billion, is buying the debt through his hedge fund ESL Investments, the people said last week. He is picking up a couple of hundred million dollars of the new term loan arranged by Bank of America Corp (BAC.N: Quote), one of the people added.

Besides Lampert, buyout firm TPG Capital LP also helped fund the term loan, according to the people. The loan, backed by Sears' inventory and receivables, pays an interest rate more than four times higher than the average for the same type of loan to a retail company, according to Thomson Reuters LPC data.

The collateral backing the loan is such that Lampert and the other investors in it would be paid in full in the event of a liquidation, the people said.

The sources asked not to be identified because details of the loan's syndications are not public. Lampert declined to comment through a spokesman last week, and a TPG representative also declined to comment last week.

Sears said in a statement on Monday that it has sufficient financial resources and liquid assets to fund its transformation and meet all of its financial obligations.

The term loan is expected to close on April 8, at which point Sears will receive the proceeds from it.   Continued...

 
Sears Holdings Corp. CEO Eddie Lampert.   REUTERS/Handout