November 19, 2018 – The Court hearing the Sears Holdings’ case approved the Debtors’ sale of Medium Term Notes [Docket No. 826]. The order states in part, “The Debtors are authorized, but not directed, in consultation with the Creditors’ Committee, to sell the MTNs to the party or parties that provide the highest or best offer and to deposit all net proceeds of the sale(s) into the Winddown Account, as provided in the DIP Orders (as defined below), provided that such authorization to sell the MTNs shall terminate at the close of business one business day following the date of the Auction and any further authorization to sell all or any of the MTNs will be subject to Court approval….In light of the fact that the sale of the MTNs and the deposit of the proceeds into the Winddown Account may affect the assets and liabilities of the respective Debtors, in connection with the chapter 11 plan process, the Debtors, the Creditors’ Committee, and the DIP ABL Agents and the Prepetition ABL Agents (each as defined in the Interim Order…dated October 16, 2018 (ECF No. 101)) will agree upon a true-up mechanism to ensure that no Debtor’s estate or creditors is adversely affected as a result of the sale of the MTNs, the deposit of the proceeds therefrom, subject to paragraph 4 hereof, into the Winddown Account or the use of such proceeds in accordance with this Order, which true-up mechanism will be subject to approval by the Court. In the event that the foregoing parties cannot agree upon a true-up mechanism, any dispute will be resolved by the Court….To the extent that the Debtors sell the MTNs, Jefferies may deduct the Jefferies Brokerage Fee (as modified on the record at the Hearing to a 1.75% fee) from the gross proceeds of such sale.”
As previously reported [Docket No. 642], “By this Motion, the Debtors request, authority to sell certain SRAC Medium Term Notes Series B (the “MTNs”) issued by Debtor Sears Roebuck Acceptance Corp. (‘SRAC’) and currently owned by various other Debtors. The Debtors have a unique opportunity to sell the MTNs and maximize their value for the benefit of all creditors, but only if a sale can be accomplished expeditiously….As of the Commencement Date, the outstanding principal amount of the MTNs was approximately $2.3 billion, plus unliquidated amounts including interest thereon and fees, expenses, charges, and other obligations incurred in connection therewith as provided under the 2002 SRAC Indenture. Approximately $1.4 billion of the MTNs are held by Sears Reinsurance Company, a non-Debtor affiliate of the Company….The Auction currently is scheduled for November 14, 2018. Thus, to be able to take advantage of favorable market forces and maximize the value of the MTNs, the Debtors must be able to effect a transfer of the MTNs prior to November 14, 2018….Given the extremely compressed time frame with which they are working, the Debtors determined that the quickest and most efficient way to sell the MTNs would be to retain a nationally recognized broker/dealer which will contact all potentially interested parties and run a sale process. The Debtors’ financial advisor contacted Barclays Bank PLC, Credit Suisse Securities (USA) LLC, Jefferies, Morgan Stanley & Co., LLC, and Goldman Sachs, all of which are eminently qualified to manage the sale process, and requested that they provide proposals to act as broker/principal in connection with the sale of the MTNs.”
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