In the proposal, Lampert has asked Sears’ board to sell off roughly $1.75 billion worth of assets, which would reduce the retailer’s total debt by nearly 80 percent to $1.24 billion, according to the documents filed Monday with the Securities and Exchange Commission. Lampert is also proposing Sears sell about $1.5 billion worth of real estate, much of which has been used as collateral in the past to generate liquidity. Some of the stores in such a transaction would be leased back to Sears, the proposal said.
Sears operated 866 stores under both its namesake brand and Kmart as of Aug. 4.
Lampert hopes the department store chain will ultimately be able to refinance $1.1 billion of debt.
“ESL’s proposal is designed to help create sufficient runway for Sears Holdings to continue its transformation and return to profitability for the benefit of its many stakeholders,” ESL President Kunal S. Kamlani said in an email to CNBC. “We would welcome broad participation from investors and encourage the Sears Board and other interested parties to work with us as quickly as possible to advance the transactions we have proposed or offer reasonable alternatives.”
Sears earlier this month reported a net loss of $508 million for the quarter. Its adjusted loss before interest tax depreciation and amortization widened to $112 million, compared with a loss of $66 million during the same quarter a year prior.
At that time, Lampert rang the alarm bells about potential dire outcomes should the company not restructure its debt-load or secure special committee approval for its asset sales.
“Given the pace and the results so far from our efforts to monetize assets, it is imperative that the company reduce debt, adjust its debt maturity profile and eliminate the associated cash interest obligations,” wrote Lampert. “We continue to believe that it is in the best interests of all our stakeholders to accomplish this as a going concern, rather than alternatives that could result in significant reductions in value.”
Sears appointed a special committee earlier this year to balance out the potential conflict of interest inherent in ESL’s bid for Kenmore and home improvement business. The committee has frustrated Lampert with its slow pace, a source familiar with the situation has told CNBC.
The committee has been talking to other potential buyers to see if it can fetch a higher offer, that source added.
The special committee’s conundrum is amplified by the predicament faced by the Pension Benefit Guaranty Corporation, the federal government’s oversight organization that guarantees individuals’ pensions and has a lien on Kenmore’s intellectual property.
Sears shares, which once traded above $140, recently hit an all-time low of $1.07. The stock initially soared more than 20 percent Monday morning but was last falling 5.5 percent to trade around $1.20. Sears’ market cap is just about $131 million today.
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