This Amendment No. 73 to Schedule 13D (this Amendment) relates to common
shares, par value $0.01 per share (the Holdings Common Stock), of Sears Holdings Corporation, a Delaware corporation (Holdings). This Amendment amends the Schedule 13D, as previously amended, filed with the Securities and
Exchange Commission by ESL Partners, L.P., a Delaware limited partnership (Partners), JPP II, LLC, a Delaware limited liability company (JPP II), SPE I Partners, LP, a Delaware limited partnership (SPE I), SPE
Master I, LP, a Delaware limited partnership (SPE Master I), RBS Partners, L.P., a Delaware limited partnership (RBS), ESL Investments, Inc., a Delaware corporation (ESL), JPP, LLC, a Delaware limited liability
company (JPP), and Edward S. Lampert, a United States citizen, by furnishing the information set forth below. Except as otherwise specified in this Amendment, all previous Items are unchanged. Capitalized terms used herein which are not
defined herein have the meanings given to them in the Schedule 13D, as previously amended, filed with the Securities and Exchange Commission (SEC).
Item 4. Purpose of Transaction.
Item 4 is hereby amended and supplemented as follows:
In the Amendment to Schedule 13D filed by the Reporting Persons with the SEC on December 6, 2018 (the Previous
Amendment), Exhibit A to the Indicative Bid that was attached as Exhibit 99.81 to the Previous Amendment was inadvertently included in the Previous Amendment rather than attached to Exhibit 99.81 thereto. The updated Indicative Bid, with
Exhibit A properly attached thereto, is
re-attached
as Exhibit 99.81 hereto and is incorporated by reference in this Schedule 13D.
On December 28, 2018, Transform Holdco LLC, a newly formed entity controlled by certain of the Reporting Persons (Transform
Holdco), submitted an offer (the Offer) to acquire substantially all of the
go-forward
retail footprint and other assets and component businesses of Holdings as a going concern.
Under the terms of the Offer, Transform Holdco would acquire substantially all of the assets of Debtors pursuant to a sale under section 363
of the Bankruptcy Code. Transform Holdco also proposed to acquire the equity of
non-Debtors
SRC O.P., LLC, SRC Facilities LLC and SRC Real Estate (TX), LLC (collectively, the SRC Entities) and all
of the outstanding asset-backed notes issued by KCD IP, LLC currently held by
non-Debtor
Sears Reinsurance Company Ltd. (the Going Concern Proposal).
As consideration for the Going Concern Proposal, the Offer provides for a total purchase price of approximately $4.4 billion, comprised
of: $850 million in cash to be funded with the proceeds of a new $1.3 billion asset-based credit facility to be obtained by Transform Holdco referred to below; a credit bid of approximately $1.3 billion; the roll-over of (and release of the
Debtors with respect to) approximately $501 million of senior indebtedness; the assumption of all of the outstanding liabilities of the SRC Entities, in the amount of approximately $592 million; $35 million in cash and rights to
purchase up to $100 million of
non-voting
securities of Transform Holdco; and approximately $1.1 billion of assumed liabilities with respect to certain protection agreements, gift cards and accrued
points under the Shop Your Way program.
The Offer contemplates that Transform Holdco expects to provide offers of ongoing employment to
up to 50,000 employees of Holdings, depending on any further actions Holdings may take prior to closing, and to reinstate Holdings prepetition severance program for the benefit of all eligible employees that accept their employment offer at
close.
In connection with the Offer, Transform Holdco has received (i) a commitment letter from three leading financial institutions to
provide $1.3 billion pursuant to a new asset-based credit facility, (ii) a commitment letter from certain of the Reporting Persons to provide one-half (or $87.5 million) of a $175 million debt financing secured by real estate and (iii) a commitment
letter from certain of the Reporting Persons to provide equity capital to Transform Holdco in an amount not to exceed $228 million with respect to the Going Concern Proposal and $66 million with respect to the Alternative Proposal (as defined
below). Each of such commitments is subject to certain terms and conditions set forth therein and there can be no assurance that the funds referred to therein will actually be made available to Transform Holdco.
While Transform Holdco and the Reporting Persons strongly believe that the Going Concern Proposal will provide the best outcome for the
Debtors and their creditors and other stakeholders, the Offer also provided that Transform Holdco would acquire certain assets of the Debtors in the event the Going Concern Proposal is not qualified or accepted (the Alternative
Proposal), including:
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certain assets comprising the business of Innovel Solutions, Inc. for $5 million, conditioned on the
continued operation of at least 250 stores as a going concern;
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certain assets comprising the Sears Home Services division (including the Parts Direct business) for
$25 million, conditioned on the continued operation of at least 250 stores as a going concern;
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certain assets comprising the Parts Direct business for $5 million plus 50% of the value of the Parts Direct
inventory acquired at closing, in the event the entire Sears Home Services division is not acquired;
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