ESL Investments Completes Acquisition of Sears Holdings’ Assets

ESL Investments, Inc. (“ESL”) today announced that its affiliate, Transform Holdco LLC, has completed its acquisition of substantially all of the go-forward retail footprint and other assets and component businesses of Sears Holdings Corporation on a going-concern basis for a total consideration of approximately $5.2 billion.

The new Sears (the “Company”) will comprise 223 Sears and 202 Kmart stores, along with prominent brands and operating businesses, including Kenmore, DieHard, Craftsman, Sears Home Services, Sears Auto Centers and Innovel.

Edward S. Lampert, CEO of ESL, said, “The best possible outcome has now been realized for all stakeholders, including Sears’ many associates, Shop Your Way members, vendors and other partners. ESL looks forward to a new era at Sears and Kmart that builds on their proud histories, while finding new ways to innovate and grow to adapt to the forces transforming the retail industry. We are ready for this exciting opportunity to help return Sears to profitability and will apply ourselves every day in pursuit of that goal.”

The new Sears moves forward from the Chapter 11 process positioned for success with:

• A footprint of profitable retail stores, a robust digital platform and an integrated ecosystem of businesses that drive franchise value
• A healthier capital structure, including a reduced debt load, that creates the liquidity necessary to invest in its go-forward plan
• Initiatives to drive margin & EBITDA growth, including technology investments, inventory optimization and Sears Home Services enhancements
• Significantly reduced SG&A expense
• Shop Your Way—a sophisticated rewards, analytics and marketing platform with more than 20 million active members and the Shop Your Way Mastercard partnership with Citibank
• Strong brand recognition and market positions in key segments:
  • #3 appliance retailer in the U.S.
  • #1 home service and direct delivery provider, including for leading third-party retailers
  • #1 provider of appliance and lawn & garden parts for the DIY community

As of the closing of the acquisition, the new Sears had more than $400 million in excess availability on its new asset-backed credit facility, which provides a significant runway to pay assumed liabilities, execute go-forward initiatives, including investments in new, smaller stores to expand the Company’s reach in the hardline category, pursue renewed marketing efforts, foster new partnerships that unlock value and invest in the Company’s unique services and delivery offerings. The new Sears has a plan to be EBITDA positive in fiscal 2019.

Transform Holdco will ensure a seamless transition, with no disruption to the member and customer experience and continuation of Sears’ member programs, warranties and protection agreements. Vendors and suppliers will continue to be paid in the ordinary course for all goods and services under agreed upon terms.

The new Sears will be led by the management team that constituted the Office of the Chief Executive of Sears Holdings, consisting of Robert A. Riecker, Chief Financial Officer, Leena Munjal, Chief Digital Officer, and Greg Ladley, President, Softlines. The Company intends to conduct a search for a Chief Executive Officer with a record of success in managing platform businesses and effectuating large-scale dynamic transformations.

Cleary Gottlieb Steen & Hamilton LLP is serving as legal counsel, and Moelis & Company is serving as financial advisor to ESL Investments, Inc.

View source version on businesswire.com: https://www.businesswire.com/news/home/20190211005792/en/

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