Sears CEO Proposes Debt Restructuring Plan To Avoid Bankruptcy; Stock Down

(RTTNews) - The hedge fund owned by Sears Holdings chief Executive Officer Edward Lampert, ESL Investments, proposed restructuring Sears to help stave off bankruptcy. Meanwhile, Sears Holdings Corp. (SHLD) Monday confirmed that its board has received a proposal from ESL Investments regarding certain liability management and real estate transactions.

SHLD is currently trading at $1.19, down $0.08 or 6.30 percent.

Sears Holdings said that its Board has directed the Company's management and its legal and financial advisors to work closely with ESL, its advisors and the Company's other stakeholders to seek to pursue liability management transactions of the nature described in the proposal.

The Special Committee of the Board, which is also engaged in negotiations with ESL concerning the proposals made in ESL's August 14, 2018 letter, Sears said.

Meanwhile, Edward Lampert's ESL Investments today asked Sears board to sell off about $1.75 billion worth of assets, which would reduce the retailer's total debt to about $1.24 billion.

ESL Investments also proposed Sears sell about $1.5 billion worth of real estate.

ESL said its goal is to enable Sears to return to profitability, for the of Sears and all of its stakeholders. It said Sears must extend near-terms debt maturities, reduce its long-term debt and eliminate the associated cash interest obligations.

ESL believes liability management proposal could save Sears $33 million per year in cash interest and eliminate $1.1 billion in debt.

Sears faces significant near-term liquidity constraints, including a $134 million maturity for second Lien Notes due October 15 2018, and associated debt maturity reserve requirements on October 1 2018.