Sears stock isn’t getting any help today from CEO Eddie Lampert’s restructuring plan.
The restructuring plan for Sears (NASDAQ:SHLD) comes from ESL Investments. This is a hedge fund belonging to Lampert. The hedge fund presented a letter to SHLD’s Board of Directors. This letter suggests ways for the company to reduce its near-term debt and work on a turn around.
The first suggestions for returning value to Sears stock holders is selling assets that belong to the retail chain. The letter notes that this could potentially reduce SHLD’s debt by $1.75 billion. This would be a major chunk out of the company’s total debt of $5.59 billion.
The assets that Eddie Lampert’s company suggests selling off include the Kenmore brand of appliances. It also advises the monetization of the company’s Sears Home Services. This includes SHIP and Parts Direct.
The plan to bring back value to Sears stock also includes selling off a large amount of the company’s real estate. ESL Investments estimates that the company could gain $1.47 billion from this. This money would also go toward paying down its debts.
The final bit of the plan to save Sears stock includes debt conversion. If this option works out with holders of Sears debt, it could results in the company further reducing its debt by $1.12 billion.
All in all, the efforts would reduce the debt of Sears down 78% to $1.24 billion. However, many moving parts will have to come together perfectly for the company to realize the full debt reduction of this plan.
SHLD stock was down 6% as of Monday morning and is down 66% year-to-date.
As of this writing, William White did not hold a position in any of the aforementioned securities.