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  • INDUSTRY NEWS

    • On September 25, 2018, Sears Holdings CEO Eddie Lampert delivered a proposal through his hedge fund, ESL Investments, to the ailing retailer that the firm said would free up $33 million a year in cash interest, $1.2 billion in liquidity over two years and cut $1.1 billion in upcoming debt in exchange for various asset sales, according to a securities filing. The proposal would trade debt for equity or new debt for certain groups of second-lien and unsecured debtholders, according to the filing. Proposed real estate sales to a potential consortium (which ESL said it is "prepared to lead or participate in") would eliminate some $1.5 billion of real estate debt. Under the proposal, the consortium would then lease back Sears' store properties to the retailer. Sears currently "faces significant liquidity constraints," with $134 million in debt coming due Oct. 15, ESL said in its proposal. Given Sears' near-term liquidity issues, "we believe that substantial progress must be made on the transactions described in this proposal or any other proposal that Sears may pursue without delay," ESL said. In a press release, Sears said it has referred the transaction to a special committee considering other ESL-related transactions, including the possible sale of the Kenmore brand.
    • On September 24, 2018, it was reported, the federal bankruptcy court overseeing Claire's Stores Chapter 11 case on Friday approved the retailer's reorganization plan, a major step on the way to exiting bankruptcy. In a press release, Claire's said the plan would remove about $1.9 billion of debt from its balance sheet and give it access to $575 million of additional capital. Claire's expects to exit bankruptcy by early October. Claire's Stores said it struck a deal with its loudest creditor, Oaktree Capital Management, that would allow the retailer to move forward with a plan to reorganize that it negotiated ahead of its Chapter 11 filing in March. An attorney for Claire's said at a court hearing that the agreement would allow for recovery of up to 25% of second-lien debt holders (which would include Oaktree), according to an audio recording of the hearing. The deal would also resolve many of the back-and-forth legal fights among Claire's, Oaktree and the retailer's other lenders. Oaktree is set to vote in favor of Claire's existing reorganization plan, after months of opposing it and trying to raise the cash to buy Claire's itself. On September 18, 2018, Claire's Stores said it struck a deal with its loudest creditor, Oaktree Capital Management, that would allow the retailer to move forward with a plan to reorganize that it negotiated ahead of its Chapter 11 filing in March. An attorney for Claire's said at a court hearing that the agreement would allow for recovery of up to 25% of second-lien debt holders (which would include Oaktree), according to an audio recording of the hearing. The deal would also resolve many of the back-and-forth legal fights among Claire's, Oaktree and the retailer's other lenders. Oaktree is set to vote in favor of Claire's existing reorganization plan, after months of opposing it and trying to raise the cash to buy Claire's itself.
    • On September 20, 2018, Rent-A-Center shareholders handily approved the retailer's proposed merger with an affiliate of private equity firm Vintage Capital Management, according to a filing with the Securities and Exchange Commission. The shareholder decision comes days after Rent-A-Center and Vintage Capital Management said that Rent-A-Center and Vintage-owned Buddy's Home Furnishings had each received a request for additional information and documents from the Federal Trade Commission as it conducts a competition review of Vintage's acquisition of Rent-A-Center, according to a press release from the companies. That extends the current waiting period imposed by law until 30 days after Rent-A-Center and Buddy's have substantially complied with the request, according to the release. "Rent-A-Center and Buddy's continue to cooperate fully with the FTC," they said in the release, adding that they expect the acquisition to close in the first quarter of 2019.
    • On September 14, 2018, L Brands announced the closure of all 23 stores and the e-commerce site of its upscale Henri Bendel women's apparel banner, which has been open for 123 years. The stores, including the Fifth Avenue flagship as well as smaller-format stores in 11 states, are set to close in January but will have new merchandise for the holidays, according to a company press release. The company estimates that Henri Bendel 2018 revenue will reach $85 million and its operating loss will be $45 million, excluding closing costs, which the company is in the process of determining.