if your conclusion is this
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"Sounds like he's very well may be bidding on the company and then just take it private, screwing over shareholders and bondholders"
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based on what i posted, then that's not what i said or implied.
if esl were to set up newco as a reit, that doesn't, in and of itself, mean shareholders and bondholders are screwed. as noted below from the lazard letter in the global bidding procedure, a successful bid for the company substantially as a whole has significant tax benefits.
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We also note that the tax profile of the Company represents the potential for substantial future value, and prospective bidders should take into account that an acquisition of the equity of the entire group pursuant to a Chapter 11 plan, through an acquisition of Sears Holdings Corporation, is most likely to preserve this potential value as part of the assets and value acquired.
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the global bidding procedure also contained the following requirement:
Cash Requirements. All bids must provide sufficient cash consideration for the payment of any applicable Termination Payment in cash in full. Any Credit Bid must include a cash component sufficient to pay any applicable Termination Payment and all obligations secured by senior liens on the applicable Assets
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that suggests to me that for whatever obligation there is a termination fee provision, the fees to those holders will be paid. additionally, any bondholders or companies which provided loans or letters of credit which were secured by real estate will also be paid.
since it was suggested the esl bid included a provision that esl/lampert would cancel their bonds, that would only leave any other secured bondholders/lenders to pay off. and according to the global bidding procedure, they would be paid off. unsecured bondholders is another story and i don't know how that might be addressed.
since it appears that only one bidder presented an "indicative bid" and that bidder was esl, IF esl is deemed to be a qualified bidder, then the following provision of the global bidding procedure kicks in:
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With respect to Assets not included in any Stalking Horse Package, if only one Qualified Bid is received in respect of such assets by the applicable Bid Deadline, the Debtors may, upon direction from the Restructuring Committee and in consultation with the Consultation Parties, determine to consummate a Sale Transaction with the applicable Qualified Bidder (without conducting an Auction for the applicable Assets) and shall file with the Bankruptcy Court, serve on the Sale Notice Parties, and cause to be published on the Prime Clerk Website a notice identifying the Qualified Bidder and setting forth the terms of the Qualified Bid and the date and time of the applicable Sale Hearing.
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any sale hearing is scheduled for february 1.
my hope is that esl will prevail and be sold the assets of sears for which it bid. referencing general growth properties, when ggp emerged from bankruptcy, it elected a reit structure which is what i think might happen with sears.
additionally, when ggp emerged from bankruptcy, it issued a prospectus for a new stock and warrant offering which included the following provision:
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Treasury stock has been reduced to $0 as Old GGP stock is cancelled per the Plan and only current stockholders of Old GGP are issued New GGP stock.
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additionally, "old ggp stockholders" also got shares in the spin off of the howard hughes company as part of the "deal" when ggp emerged from bankruptcy.
as i have maintained before, this IS a crapshoot but not a zero possibility that common stockholders will survive. if we do, there will be very significant dilution but i can not imagine anybody who holds shldq at anything less than a $1/share will complain much if they get issued shares of the newco which could trade for a multiple of that.
suppose there is also a possibility if the old shares survive they could be traded in some fashion that is not one for one. in other words, maybe 10 shares of shldq get one share of newco. don't think that would happen but again, who knows?
if esl is approved as a qualified bidder, then it will all be in the judge's hands for a hearing on feb 1
