"Sears Holdings Announces Receipt Of Letter From ESL Investments" $SHLD

See the letter here.

Eddie is interested in buying Kenmore, the Home Improvement business of the Sears Home Services division, the Parts Direct business of the Sears Home Services division, and "Sears' real estate" (all of it?).

But I thought this was the most interesting part:

Exchange and Tender Offers: The transaction would be undertaken in connection with (i) an exchange offer with respect to 50% of approximately $600 million in outstanding 2nd lien indebtedness not secured by real estate for equity in Sears of equal value, and (ii) a tender offer for 100% of Sears’ approximately $900 million in outstanding unsecured indebtedness at a discount to par reflective of the current trading prices or, alternatively, for Sears equity. ESL believes that the exchange offer and the tender offer would be beneficial to the debt holders, by providing liquidity, to Sears, by reducing its debt obligations, and to equity holders, by reducing risk and giving Sears time to pursue value maximizing strategies. Assuming the proceeds from the contemplated divestitures is sufficient to allow Sears to substantially reduce its overall leverage, ESL would consider participating in such exchange offer and tender offer. [...]

This proposal, including the exchange offer and tender offer and any alternative transactions with third parties, are part of a comprehensive solution to create a viable and healthy Sears, and will allow Sears to reduce its debt, extend its maturity profile and alleviate its liquidity challenges.

Wow, an exchange offer of stock for the unsecured indebtedness (e.g. 2019 notes) really highlights the capital structure mispricing that we pointed out last week.