Lampert's bid is backed in part by $1.3 billion in financing from three different financial institutions, the spokesman for his hedge fund, ESL Investments Inc, said. It would preserve about 425 stores that Sears has yet to close, and secure the jobs of up to 50,000 workers out of the 68,000 employed by the retailer. An affiliate of ESL, Transform Holdco LLC, submitted the bid, the spokesman said.
People familiar with the matter said the financing comes from Sears' existing lenders Bank of America Corp and Citigroup Inc, as well Royal Bank of Canada, which was not previously a lender, which together agreed to provide a $950 million asset-based loan and a $350 million revolving credit line.
Some of Lampert's bid relies on $1.8 billion of Sears debt that ESL already holds and plans to forgive to back the offer, the sources said. The bid also includes about $400 million in financing from non-bank lenders, the sources said.
The bid contemplates assuming protection agreements Sears has previously sold to reassure customers who have bought appliances, televisions, lawn tractors and other big-ticket items, the ESL spokesman said.
"Factoring for all considerations, we believe that our going concern bid provides the best path forward for the company, the best option to save tens of thousands of jobs and is superior for all of Sears’ stakeholders to the alternative of a complete liquidation," the ESL spokesman said. "Much work remains and there is no assurance our proposal will be completed."
Sears will now evaluate the bid to determine whether it is viable, and there remains a possibility the company could reject it, some of the sources said.
4.4 billion -1.3B banks -1.8B credit forgiveness from ESL - 400m from mysterious others. That leaves 900M he's counting from gift cards and SYWR this time around, and probably zero cash out of pocket.