Eddie Lampert wins auction for what’s left of Sears

Sears has a new lease on life, but it could be a tenuous one. Eddie Lampert, the company’s chairman and biggest shareholder, on Wednesday morning emerged as the winning bidder for the bankrupt retailer, a person familiar with the matter told CBS MoneyWatch.

The billionaire investor’s $5.2 billion proposal, made through his hedge fund ESL Investments, was increased from an earlier bid that followed an auction that began Monday behind closed doors at the New York offices of Sears’ lawyers. 

Lampert has touted his plan to buy Sears as one that would save up to 50,000 jobs and keep 425 stores operating in the U.S. He relinquished his role as CEO of Sears after the company filed for Chapter 11 bankruptcy protection in October. Since then, it has shuttered hundreds of stores and laid off thousands of workers.

The exact financial terms of Lampert’s winning bid were not immediately available. Spokespersons for ESL and Sears declined comment.

With Lampert at the helm, the more than century-old retailer kept afloat on loans from ESL and by selling its Kenmore appliance and Craftsman tool brands. Some of the retailer’s creditors question in court filings whether Lampert’s actions benefited ESL more than Sears.

Neil Saunders, managing director for retail at GlobalData, believes Lampert, as a big lender to Sears, wants to keep the business going to generate more cash — money that would help pay down debts owed to his other business interests. 

“There is also a property play as Lampert is a Sears landlord, so if the company keeps going, he can collect rent on some of the stores,” Saunders added.

Former Sears exec says retailer has been on “death spiral” for decade

Four years ago, Sears created a real estate investment trust, or REIT, to extract revenue from its properties. It sold and leased back more than 200 properties to the REIT, in which Lampert is a significant stakeholder.

Lampert owns 31 percent of Sears’ outstanding shares, and his hedge fund holds an 18.5 percent stake, according to FactSet.

Sears, hit hard during the recession and facing changing consumer tastes and strong competitors, hasn’t recorded a profit since 2010 and tallied 11 consecutive years of declining sales. Lampert has been criticized for not investing in the stores, which remain shabby.

As Philip Emma, a senior Debtwire analyst and an expert in retail bankruptcies, put it: “There has to be some level of investment to keep it going, unless something changes with the status quo of how it’s run.”

— The Associated Press contributed to this report.