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Sears C.E.O. Seeks to buy the most valuable parts of the retailer

Mr. Lampert offered to pay Sears $ 500 million for its home appliance units and home service units, but he did not mention Kenmore's price or the real estate price. He noted in his letter that the company had been trying to sell the assets for almost two years, but had not been able to reach an agreement with potential buyers on "acceptable terms".

The proposal to acquire Kenmore and the other business units left the retailer already further reduced, which led some to wonder if Mr. Lampert has been trying to remove the most valuable assets in the event of bankruptcy of the company .

"Today's news simply looks like another entrepreneurial pre-move by insiders to secure the most valuable assets," Bill Dreher, an analyst at the Susquehanna Financial Group, wrote in a research note on Monday night.

A Goldman Sachs alumnus, Mr. Lampert has tried to modernize the company through a series of financial engineering, store closings and asset sales.

In recent years, Sears has spun off or sold a variety of brands, including Sears Hometown, the manufacturer of Lands & # 39; End apparel and its Craftsman tool brand. [19659006] In 2015, Mr. Lampert sold more than 266 Sears and Kmart properties for $ 3 billion to a listed real estate investment group called Seritage Growth Properties.


Edward S. Lampert, whose hedge fund has a controlling stake in Sears, has tried for years to save the troubled retailer.

Gregory Bull / Associated Press

At that time, Mr. Lampert was not only the executive director, but also the president of Seritage. The sale gave rise to a lawsuit in which the shareholders argued that there had been no independent and fair valuation of the properties and that there were multiple conflicts of interest. The claim was settled for $ 40 million.

"He has been taking out productive assets from the company since day 1," said Mark A. Cohen, a former Sears executive who is now director of retail studies at Columbia Business School. "Soon he's going to start peeling paint on the wall."

As the largest shareholder of Sears, Mr. Lampert's hedge fund may lose if the company ends up in bankruptcy.

But he was able to reduce some of those losses if Kenmore, a well-known appliance brand, prospered outside of Sears.

Last month, Sears was able to reduce some pressure by announcing a so-called debt swap deal, which could allow the retailer to pay off some debt by converting it into shares. But analysts warn that the company is consuming more than a billion dollars in cash a year and its sales continue to decline. The company lost $ 562 million in the fiscal year that ended on February 3, according to Moody & s Investors Service.

Increasing cash through asset sales will not only help keep the company afloat with its debt and pension obligations, but could also help potential concerns among suppliers that are crucial to Sears' survival. Toys "R" Us partly blamed nervous sellers for declaring it bankrupt last year.

"It is essential that Sears improves its liquidity profile," said Christina Boni, senior credit analyst at Moody & # 39; s.

Mr. Lampert said he was interested in acquiring the company's remaining real estate, which was not sold in the 2015 agreement with Seritage.

If Mr. Lampert and the Sears board of directors reach an agreement, the company would still own more than 500 Sears stores, an auto repair business, a credit card unit and about 400 Kmart stores.

On Monday, the Sears board said that a special committee of independent directors would evaluate Mr. Lampert's proposal.

The company's stock price rose 7.6 percent on Monday to $ 3.24. Three years ago, the company's shares were quoted at $ 41.13.

"We are very excited about our ownership interest in Sears and its future," Lampert said in his letter.

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