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Billionaire Lampert, who also runs hedge fund ESL Investments
Inc, said the 125-year-old department store chain should take
steps reduce its debt load to $1.2 billion from $5.6 billion.
Lampert and his hedge fund, which he controls, own about 50
percent of Sears, according to Thomson Reuters data.
Lampert said Sears should offer creditors options to extend
their debt or exchange it for new holdings, giving Sears more
time to turn its business around.
Lampert said the company should continue selling real estate to
reduce debt by $1.5 billion and that ESL would be a back-up
bidder for the properties.
Sears said it has referred Lampert's proposal to a special
committee.
In an internal message seen by Reuters, Sears said, "We will now
be working aggressively to execute liability management
transactions so that we can extend our runway and continue
executing on our transformation strategy."
The proposals came as a Sears special committee weighs a prior
offer from Lampert to acquire the retailer's Kenmore appliances
brand and its home services business for as much as $480
million. Sears warned this month it could go out of business as
it waits for approval from the committee on the deal.
The U.S. government agency overseeing the pensions of 100,000 of
the company's former workers must also approve a sale of
Kenmore.
Sears' shares, worth $30 in 2015, were down 3 percent at $1.24
Monday.
Credit ratings agency Fitch Ratings Inc said it viewed Lampert's
proposed deal as "challenging to execute." Even if the deal is
done, Sears would still need significant cash to operate because
of challenges in retail, the ratings agency said.
In recent decades, Sears, which was the world's largest retailer
in the 1960s, has struggled in the face of declining foot
traffic at its brick-and-mortar stores.
In another attempt to avoid bankruptcy, money-losing Sears last
year sold its Craftsman tool brand to power tool maker Stanley
Black & Decker <SWK.N> for $900 million.
(Reporting by Uday Sampath in Bengaluru, writing by Sweta Singh;
editing by Steve Orlofsky and Cynthia Osterman)
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