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"And there's no such thing called great investment in OTC ecept shldq 5.2 BILLION APPROVED buyout court backed"
MNST
In re: )Case No. 17-42267-659
) CHAPTER 11
PAYLESS HOLDINGS LLC, et al., )
) Jointly Administered
Debtors. )
NOTICE OF FILING OF PLAN SUPPLEMENT
c) In connection with an Initial Public Offering, all of the outstanding Shares of the Company shall automatically convert into shares of common stock of the Successor Corporation (the “Stock”) immediately prior to the consummation of the Initial Public Offering or at such other time as the Board of Managers may determine. Prior to such conversion, the Company shall provide the Members the option to elect, within ten (10) Business Days following receipt from the Company of a written notice of the anticipated consummation of the Initial Public Offering, for any such Member’s Shares to be converted to a different class of common stock than the Stock (the “Alternative Class of Common Stock”), with such Alternative Class of Common Stock having the same rights as the Stock other than that (i) such Alternative Class of Common Stock shall not be registered and listed on a securities exchange and (ii) such Alternative Class of Common Stock shall have the right to convert into shares of Stock at any time at the election of the holder thereof.
"To the extent provided in regulations, the term “equity structure shift” includes taxable reorganization-type transactions, public offerings, and similar transactions"
the following is from the purchase agreement:
Section 2.12 Tax Reorganization.
(a) The Parties intend that the transactions set forth in this Agreement, as structured and implemented as described in Section 9.2(a), together with the Bankruptcy Plan (as defined below), will, unless and except to the extent that Buyer elects otherwise with respect to a particular Seller or Sellers pursuant to Section 2.12(b), (i) constitute one or more plans of reorganization under section 368(a) of the Code (as defined below) and (ii) as qualifying as one or more reorganizations thereunder (a “Tax Reorganization”).
(b) Buyer may, at any time on or before the earlier of (i) 15 days prior to the effective date of the Bankruptcy Plan and (ii) December 1, 2019, elect, by providing to Sellers written notice of its election, to treat one or more of the transactions (each, a “Designated Sale Transaction”) set forth in this Agreement as not qualifying as a Tax Reorganization, which election shall be effective unless Designated Tax Advisor cannot provide a Tax Opinion that such Designated Sale Transaction can be completed in a manner that would not be treated as a “reorganization” within the meaning of section 368 of the Code; provided, however, that in connection with any such Buyer election to treat all the transactions described in this Article II as Designated Sale Transactions (resulting in no transfer of Sellers’ Tax attributes to Buyer), the Parties shall, if requested by Sellers in writing, identify a business of the Sellers that would become part of the Excluded Assets and consider in good faith any other changes to the structure of the transaction that are reasonable and necessary as a commercial, bankruptcy law and other legal matter to achieve that result. If Buyer does not elect pursuant to this Section 2.12(b) to treat all the transactions described in this Article II as Designated Sale Transactions (resulting in no transfer of Sellers’ Tax attributes to Buyer), or any such election is not effective, then Buyer and Sellers shall continue to comply with Section 9.2(a).
"In other words, the exercise price is adjusted (reduced) if the commons are saved and there is dilution through a debt for equity swap in the final POR."
not a lawyer, but that is not what i took from the language. if there is a change of control and commons survive, if you also hold warrants, then whatever exchange ratio of old stock for new stock is approved in a por, for each warrant you holdm that can be exchanged for new stock, just like the old.
i don't see anything which indicates an adjustment to the $28.41 exercise price, just an exchange according to provisions in the por.
so, like with shldq, if you don't think the commons will survive, it would seem any play you have with the common stock warrants would be to expect movement up/down over the current 5 cents or so at which they are currently trading and flip against that.
nothing to say you couldn't flip and or hold depending on how you feel about the commons surviving. however, with millions of shldq trading each day versus a few hundred thousand warrants, the ability to buy/sell commons is much easier than warrants.
linda, just finished doing the same thing. because of the interrelationship with the various entities, the only thing i seem to be able to tie out is a 255,382 share increase in sole voting power when comparing esl partners, jpp, and esl investment inc. the change for each one of these (although all controlled by lampert) is 255,382.
comparing shares beneficially owned allows for the greater number but why shown in beneficially owned as opposed to sole voting power if there was actually some exchange of warrants for stock?
even though the share increase (and corresponding warrant reduction) are tied to the second lien term note, when i went back to review the term note which was filed around 1/10/18, i could not find a provision for accepting stock in lieu of payment (probably for accrued interest).
first thought it might be PIK (payment in kind) but that only seems related to debt instrucments, not the term loan.
in any case, it certainly doesn't seem to be any type of open market purchase of stock as some have surmised.
assuming commons are preserved, what is involved in a plan of reorganization? (it will take months, not weeks)
How Does Chapter 11 Work?
The U.S. Trustee, the bankruptcy arm of the Justice Department, will appoint one or more committees to represent the interests of creditors and stockholders in working with the company to develop a plan of reorganization to get out of debt. The plan must be accepted by the creditors, bondholders, and stockholders, and confirmed by the court. However, even if creditors or stockholders vote to reject the plan, the court can disregard the vote and still confirm the plan if it finds that the plan treats creditors and stockholders fairly. Once the plan is confirmed, another more detailed report must be filed with the SEC on Form 8-K. This report must contain a summary of the plan, but sometimes a copy of the complete plan is attached.
Who Develops the Reorganization Plan for the Company?
Committees of creditors and stockholders negotiate a plan with the company to relieve the company from repaying part of its debt so that the company can try to get back on its feet.
• One committee that must be formed is called the "official committee of unsecured creditors." They represent all unsecured creditors, including bondholders. The "indenture trustee," often a bank hired by the company when it originally issued a bond, may sit on the committee.
• An additional official committee may sometimes be appointed to represent stockholders.
• The U.S. Trustee may appoint another committee to represent a distinct class of creditors, such as secured creditors, employees or subordinated bondholders.
After the committees work with the company to develop a plan, the bankruptcy court must find that it legally complies with the Bankruptcy Code before the plan can be implemented. This process is known as plan confirmation and is usually completed in a few months.
Steps in Development of the Plan:
• The debtor company develops a plan with committees.
• Company prepares a disclosure statement and reorganization plan and files it with the court.
• SEC reviews the disclosure statement to be sure it's complete.
• Creditors (and sometimes the stockholders) vote on the plan.
• Court confirms the plan, and
• Company carries out the plan by distributing the securities or payments called for by the plan
the warrants expire on december 15, 2019. subject to certain "adjustments" the warrants have an exercise price of $28.41. at the time the warrants were issued, there were 500k shares authorized with slightly more than 106k issued.
seems the best best for being able to truly cash in on these warrants (other than just flipping based on trading price) would be from the change of control/reorganization provision which would still require the preservation of common shares. (cut/paste below):
__________________________________________________________________
Business combinations. In case of any merger, consolidation, statutory share exchange, amalgamation, tender offer, recapitalization, reorganization, scheme of arrangement or similar transaction that requires the approval of the Company’s stockholders (collectively, a “Business Combination”), the right of a holder of a Warrant to receive shares of Common Stock upon exercise of a Warrant shall be converted into the right to exercise such Warrant to acquire the number of shares of stock or other securities or property (including cash) which the Common Stock issuable (at the time of such Business Combination) upon exercise of such Warrant immediately prior to such Business Combination or reclassification would have been entitled to receive upon closing of such Business Combination or reclassification.
Sears’s authorized capital stock consisted of 500,000,000 shares of common stock of $.01 par value per share, of which 106,482,832 shares were issued and outstanding as of the date of this prospectus supplement, and 20,000,000 shares of preferred stock of $.01 par value per share, of which no shares were issued and outstanding as of the date of this prospectus supplement. The authorized shares of any class of stock may be increased or decreased, as the case may be, by the affirmative vote of the holders of a majority of the outstanding shares of the stock entitled to vote
RECENT TRANSACTIONS BY THE REPORTING PERSONS IN THE SECURITIES OF
SEARS HOLDINGS CORPORATION
Entity Date of
Transaction Description
of Transaction Shares
Acquired Price
Per Share
JPP, LLC 01/05/2019 Acquisition from Holdings of Second Lien Term Loans 559,095 (1) (2)
JPP II, LLC 01/05/2019 Acquisition from Holdings of Second Lien Term Loans 255,382 (1) (2)
can't get this to wrap properly but the recent filing shows 814,477 shares "recently" acquired by jpp which is a related entity with esl. do a "find" for "annex b" in the recent 13d (not the attachment) and you will see this.
linda, if you compare the 1/17 filing against the 1/10 filing there is an increase in els's share count. can't tie it to form 4 though
would suggest you research what the sparrow properties are.
"Perhaps the IRS requires proof of no change in ownership after a Chapter 11 Bankruptcy. "
perhaps that is why what seems like odd language in the recent 13d filing:
why disclaim ownership?
Item 5. Interest in Securities of the Issuer.
Item 5 is hereby amended and restated in its entirety as follows:
“(a)-(b) Each Reporting Person declares that neither the filing of this statement nor anything herein shall be construed as an admission that such person is, for the purposes of Section 13(d) or 13(g) of the Act or any other purpose, the beneficial owner of any securities covered by this statement.
Each Reporting Person may be deemed to be a member of a group with respect to Holdings or securities of Holdings for the purposes of Section 13(d) or 13(g) of the Act. Each Reporting Person declares that neither the filing of this statement nor anything herein shall be construed as an admission that such person is, for the purposes of Section 13(d) or 13(g) of the Act or any other purpose, (i) acting (or has agreed or is agreeing to act) with any other person as a partnership, limited partnership, syndicate, or other group for the purpose of acquiring, holding, or disposing of securities of Holdings or otherwise with respect to Holdings or any securities of Holdings or (ii) a member of any syndicate or group with respect to Holdings or any securities of Holdings.
yes, all of those things were in the entries. from reading the exhibit to the most recent filing, it seems there is a lot going on regarding the structuring to protect the nol's.
if the securities are or are to become worthless, why perfect security interests?
Section 8.4 Financing Assistance; Additional Information.
(a) From the date hereof to earlier of (x) the date this Agreement is terminated in accordance with its terms and (y) the Closing Date, Sellers shall provide to Buyer and shall use reasonable best efforts to cause its officers, employees and advisors to provide to Buyer, such cooperation as is customary for financings of the type contemplated by the Debt Commitment Letters and as is reasonably requested by Buyer in connection with arranging and obtaining the Debt Financing, which cooperation includes using reasonable best efforts to (i) cause the participation by one or more representatives of senior management in a reasonable number of meetings, due diligence sessions and presentations upon reasonable prior notice and in reasonably convenient locations, (ii) reasonably assist Buyer and the ABL Financing Sources with the preparation of…
(ix) execute and deliver any documents as reasonably requested by Buyer as are customary in financings of such type and as are accurate, and otherwise facilitate the pledging of and granting, recording and perfection of security interests in share certificates, securities and other collateral (including releasing any Liens on the Acquired Assets in connection with any existing indebtedness of Sellers)…
Also from the attachment, the purchase price includes the securities consideration, whatever that is/means:
ARTICLE III
PURCHASE PRICE
Section 3.1 Purchase Price. The aggregate purchase price for the purchase, sale, assignment and conveyance of Sellers’ right, title and interest in, to and under the Acquired Assets shall consist of the following (collectively, the “Purchase Price”):
(d) the Securities Consideration;
and this, also from the attachment to the filing:
Section 2.2 Excluded Assets.
(l) except as otherwise expressly included as Acquired Assets, all shares of capital stock or other equity interests of any Seller or Subsidiary of the Seller or securities convertible into or exchangeable or exercisable for shares of capital stock or other equity interests of any Seller, Subsidiary of the Seller or any other Person;
What is the purpose of this and what does it mean? Does it mean that treasury stock will not be transferred to esl? Since there would have to be authorization to issue stock which is authorized but not yet issued, does this mean the currently outstanding issues stock wouldn’t be subject to any significant dilution re: treasury stock?
Is treasury stock being issued to satisfy what is anticipated under the annex b language?
Don’t know but would like to.
but wait, there's more!
“Securities Consideration” means debt or equity securities in Buyer, in an amount and form to be determined by Buyer in an amount and form reasonably acceptable to Buyer, including as to subordination.
this language was in the amendment to the filing regarding "payment" from seller to buyer.
again, not sure why, but interesting in that it begs a lot of questions
further to these issues, This all seems to be some type of legal dance to preserve the nol’s:
Distribution Requirement” shall mean the requirement that each Seller (except if and to the extent (x) Buyer elects, in accordance with this Agreement, that the transactions set forth in this Agreement with respect to such Seller shall not be treated as a Tax Reorganization, or (y) if requested by such Seller, Designated Tax Advisor is unable to deliver a Tax Opinion that the transactions set forth in this Agreement with respect to such Seller may be treated as a Tax Reorganization) (i) shall distribute the Securities Consideration received by it to Persons qualifying as holders of “securities” of such Seller for purposes of section 354 of the Code, (ii) shall distribute all of the cash received pursuant to Section 3.1(a), as well as all of its other property pursuant to the Bankruptcy Plan, (iii) shall dissolve no later than the end of the third taxable year ending after the Closing Date, and (iv) during the period between the Closing Date and its dissolution, shall limit its activities to those which are merely for the purpose of liquidating its assets (which may include maintaining a going operation for the preservation of value, pending distribution or sale), winding up its affairs, resolving and paying its debts, and distributing any remaining assets (which may include a distribution to a non-corporate liquidating vehicle).
can't explain why they did it, but the legal bills show they did work characterized as shown in the posted entries.
my question is why issue worthless certificates?
possibility could be for the reason shown in annex b (i believe that is the reference) on the most recent filing which seemed to indicate the exchange of certain notes for shares.
again, if shares are to become worthless, why bother?
remember from the 13d filing there were warrants which could be exchanged for stock (although my recollection is the strike price was mid $20 range.
right now, a lot of questions with no real answers.
can't explain why they did it, but the legal bills show they did work characterized as shown in the posted entries.
my question is why issue worthless certificates?
possibility could be for the reason shown in annex b (i believe that is the reference) on the most recent filing which seemed to indicate the exchange of certain notes for shares.
again, if shares are to become worthless, why bother?
remember from the 13d filing there were warrants which could be exchanged for stock (although my recollection is the strike price was mid $20 range.
right now, a lot of questions with no real answers.
Interesting entries, although it is impossible to tell the true meaning, from most recent weil billing: individuals named are the lawyers working on the issue with hours billed and total amount charged for the dates referenced:
11/21/18 Olson, Eric John 5.00 1,875.00 010 55278357
PREPARE STOCK CERTIFICATES.
11/26/18 Olson, Eric John 6.50 2,437.50 010 55320964
PREPARE STOCK CERTIFICATES AND REVIEW STOCK POWERS.
REVIEW ISSUES ON ESL
STOCK, CLEARY LETTER AND RESEARCH ON SAME
11/09/18 Lewitt, Alexander G. 2.70 1,512.00 031 55162672
FLIP STOCK TRADING/NOL INTERIM ORDER INTO FINAL ORDER (2.6); EMAIL J. MARCUS, E. REMIJAN AND
S. GOLDRING (.1).
11/10/18 Lewitt, Alexander G. 4.30 2,408.00 031 55162570
FLIP STOCK TRADING/NOL INTERIM ORDER INTO FINAL ORDER (4.1); EMAIL COPY OF SAME TO J.
MARCUS, S. GOLDRING AND E. ALLISON (.2)
this from page 3 of docket #1579 posted today:
(collectively, together with the Company's
equityholders, the "Stakeholders")
notice that lazard is equating equityholders (stockholders) with stakeholders.
on a variation of an earlier explanation, all stockholders are equityholders but not all equityholders are stockholders.
footnote from lazard engagement letter:
As used in this Agreement, the term "Sale Transaction" means (a) any acquisition, merger, consolidation, or other business combination pursuant
to which the business or assets of the Company are, directly or indirectly, combined with a third party; (b) any acquisition, directly or indirectly,
by a buyer or buyers (which term shall include a "group" of persons as defined in Section 13(d) of the Securities Exchange Act of 1934, as amended,
and shall also include current Stakeholders), of equity interests or options, or any combination thereof, constituting a majority of the then outstanding
stock of the Company or possessing a majority of the then outstanding voting power of the Company; (c) any other purchase or acquisition, directly
or indirectly, by a buyer or buyers (including current Stakeholders) of significant assets, securities or other interests of the Company or (d) the
formation of a joint venture or partnership with the Company or direct investment in the Company for the purpose of effecting a transfer of an
interest in the Company to a third party (including current Stakeholders). For the avoidance of doubt, no issuance of convertible debt obligations
(or any issuance of equity as a result of the conversion of such convertible debt obligations) in exchange for Existing Debt Obligations shall in and
of itself constitute a Sale Transaction.
footnote from lazard engagement letter:
As used in this Agreement, the term "Sale Transaction" means (a) any acquisition, merger, consolidation, or other business combination pursuant
to which the business or assets of the Company are, directly or indirectly, combined with a third party; (b) any acquisition, directly or indirectly,
by a buyer or buyers (which term shall include a "group" of persons as defined in Section 13(d) of the Securities Exchange Act of 1934, as amended,
and shall also include current Stakeholders), of equity interests or options, or any combination thereof, constituting a majority of the then outstanding
stock of the Company or possessing a majority of the then outstanding voting power of the Company; (c) any other purchase or acquisition, directly
or indirectly, by a buyer or buyers (including current Stakeholders) of significant assets, securities or other interests of the Company or (d) the
formation of a joint venture or partnership with the Company or direct investment in the Company for the purpose of effecting a transfer of an
interest in the Company to a third party (including current Stakeholders). For the avoidance of doubt, no issuance of convertible debt obligations
(or any issuance of equity as a result of the conversion of such convertible debt obligations) in exchange for Existing Debt Obligations shall in and
of itself constitute a Sale Transaction.
re: bruce b holding sears. posted this earlier but here it is again.
https://www.gurufocus.com/news/757288/bruce-berkowitz-axes-67-of-sears-holdings-stake
detearing,
welcome to the dark side again. remember you from the general growth board. as with that one, waiting to see status of commons.
also from the chi tribune if not already posted. woke up to this!
https://www.chicagotribune.com/business/ct-sears-bankruptcy-auction-20190116-story.html
also from the chi tribune if not already posted. woke up to this!
https://www.chicagotribune.com/business/ct-sears-bankruptcy-auction-20190116-story.html
short interest reduced:
https://finance.yahoo.com/news/see-ihs-markit-score-report-130156450.html
• January 16, 2019: Target date for debtors to file with the Bankruptcy Court the Notice of Auction Results and to provide the applicable Counterparty with Adequate Assurance Information for the Successful Bidder (if different than the Stalking Horse Bidder)
from prime clerk docket info:
January 14, 2019 (10:00 a.m.): Auction held at Weil offices, if necessary
while you're waiting for today to play out:
https://finance.yahoo.com/news/sears-bankruptcy-raises-old-questions-200107708.html
"Other insiders own additional 40+million shares"
that may have been true last year before sears filed for bk. however, berkowitz resigned as a director of sears, is no longer an insider, and has reduced his holdings from a peak of 28.9 million shares in q1 of 2017 to roughly 4.5 million as of his last filing.
https://www.gurufocus.com/news/757288/bruce-berkowitz-axes-67-of-sears-holdings-stake
___________________________________________________________________
from the last annual report for fiscal year ended 2/3/2018
Bruce R. Berkowitz was a member of our Board of Directors from February 2016 through October 2017. Mr. Berkowitz serves as the Chief Investment Officer of Fairholme Capital Management, LLC, an investment adviser registered with the SEC, and is the President and a Director of Fairholme Funds, Inc., a SEC-registered investment company providing investment management services to three mutual funds (together with Fairholme Capital Management, LLC and other affiliates, "Fairholme"). Fairholme owned approximately 18% of our outstanding common stock at February 3, 2018 (excluding shares of common stock that Fairholme may acquire within 60 days upon the exercise of warrants to purchase shares of our common stock).
_____________________________________________________________________
with berkowitz out & his shares sold, doubt insiders own more than 50%
there is e-filing available so filing over the weekend would not be unusual.
the court had previously entered an order giving the "ok" to the cyrus purchase of the swaps, based on the evidence in front of the court at the time. opposing parties said they were not aware of the impact of the cyrus bid and the fact it would lock up the swaps, thereby depriving other parties of "legitimate" access through the bidding process of acquiring some or all of the swaps.
this motion is asking the court to approve their request for discovery against cyrus to see if anything untoward went on at the time cyrus bid and locked up the swaps.
i believe these swaps were a way to mitigate or hedge exposure and as a result of cyrus effectively "cornering" the market on them, no one else was able to mitigate their position.
this upcoming auction will in no way close off further filings. the docket will be active for quite some time.
Focusing on jobs could tip the scales in Lampert's favor because there's an unwritten preference in bankruptcy courts for keeping companies open and people employed if the bid is close enough to those from liquidators. Judge Robert Drain hinted as much this week.
https://www.chicagotribune.com/business/ct-biz-sears-bankruptcy-lampert-bid-workers-20190111-story.html
tsp, where did you get your 70% figure? you have previously "quoted" from the sec schedule 13d filing. the 70+% figure is based on numbers of shares outstanding if, and only if, warrants are exercised.
don't argue one way and then jump ship when challenged.
ceo doesn't own over 50% of the os.
based on the recent filing, esl partners has sole voting power over 52,570,080 of the 109,236,080 shares OUTSTANDING. that equates to 48.1%.
Q: What happens next?
A: Sears will aim to notify the Bankruptcy Court of the auction results by Wednesday, according to a timeline approved by the court. Other parties have eight days to challenge the outcome in court. Ultimately, a judge has to approve the sale of Sears’ assets, a decision expected in the coming weeks.
https://www.chicagotribune.com/business/ct-biz-cb-sears-bankruptcy-auction-20190110-story.html
You don’t just get to drop the “q”. the company (whatever company) will have to petition to be relisted. Not sure on what exchange they might try to be relisted (even if that is a possibility for them), but as of now, the only stock to ever be relisted on the nyse while still in bankruptcy was ggp.
Chicago-based General Growth, the No. 2 mall owner after Simon Property Group Inc (SPG.N), was the only company to be reinstated on the New York Stock Exchange during bankruptcy, Gropper said. (gropper was the bk judge who heard the ggp case)
https://www.reuters.com/article/us-generalgrowth/general-growth-cleared-to-exit-bankruptcy-idUSTRE69K41320101022
while transform holdcorp is a new company, it was the same company which esl created when it made its original $4.4 billion bid on dec 28
_____________________________________________________________________
December 28, 2018
Lazard Frères & Co. LLC
30 Rockefeller Plaza
New York, NY 10112
Tel: (212) 632-6479; (212) 632-6418
Attention: Brandon Aebersold, Managing Director
Levi Quaintance, Vice President
Ladies and Gentlemen,
This letter indicates the terms upon which Transform Holdco LLC (“Buyer”), a newly formed entity controlled by ESL Investments, Inc. (“ESL”), would be prepared to acquire substantially all of the go-forward retail footprint and other assets and component businesses of Sears Holdings Corporation (together with its subsidiaries, “Sears”) as a going concern (the “Going Concern Proposal”). This letter is being submitted in response to the process letter filed with the United States Bankruptcy Court for the Southern District of New York (the “Court”) on behalf of the debtors (the “Debtors”) in the Chapter 11 cases captioned as In re Sears Holdings Corporation, et al., Case No. 18-23538 (Bankr. S.D.N.Y.) (RDD) on November 21, 2018 (the “Process Letter”) [Docket No. 862] and the Global Bidding Procedures (the “Bidding Procedures”) set forth in the Global Bidding Procedures Order entered on November 19, 2018 [Docket No. 816].