This Amendment No. 67 to Schedule 13D (this “Amendment”) relates to common shares, par value $0.01 per share (the “Holdings Common Stock”), of Sears Holdings Corporation, a Delaware corporation (“Holdings”). This Amendment amends the Schedule 13D, as previously amended, filed with the Securities and Exchange Commission by ESL Partners, L.P., a Delaware limited partnership (“Partners”), JPP II, LLC, a Delaware limited liability company (“JPP II”), SPE I Partners, LP, a Delaware limited partnership (“SPE I”), SPE Master I, LP, a Delaware limited partnership (“SPE Master I”), RBS Partners, L.P., a Delaware limited partnership (“RBS”), ESL Investments, Inc., a Delaware corporation (“ESL”), JPP, LLC, a Delaware limited liability company (“JPP”), and Edward S. Lampert, a United States citizen, by furnishing the information set forth below. Except as otherwise specified in this Amendment, all previous Items are unchanged. Capitalized terms used herein which are not defined herein have the meanings given to them in the Schedule 13D, as previously amended, filed with the Securities and Exchange Commission (“SEC”).
Item 3. Source and Amount of Funds or Other Consideration.
Item 3 is hereby amended and supplemented as follows:
“On July 31, 2018, the Second Lien Borrowers elected to pay interest on the Second Lien Term Loan by increasing the principal amount of the Second Lien Term Loan. In connection with this election by the Second Lien Borrowers, the principal amount of the portion of the Second Lien Term Loan held by JPP and JPP II was increased accordingly, and no cash consideration was paid by either JPP or JPP II in connection with this increase to the principal amount of the Second Lien Term Loan. As a result of the foregoing, (i) JPP may acquire up to an additional 351,027 shares of Holdings Common Stock within 60 days upon the conversion of the Second Lien Term Loan into shares of Holdings Common Stock, and (ii) JPP II may acquire up to an additional 160,341 shares of Holdings Common Stock within 60 days upon the conversion of the Second Lien Term Loan into shares of Holdings Common Stock.
In a grant of shares of Holdings Common Stock by Holdings on July 31, 2018, pursuant to the Extension Letter between Holdings and Mr. Lampert, Mr. Lampert acquired an additional 159,575 shares of Holdings Common Stock. Mr. Lampert received the shares of Holdings Common Stock as consideration for serving as Chief Executive Officer, and no cash consideration was paid by Mr. Lampert in connection with the receipt of such shares of Holdings Common Stock.”
Item 4. Purpose of Transaction.
Item 4 is hereby amended and supplemented as follows:
“On July 25, 2018, the Mezzanine Loan Borrower, JPP and JPP II, as lenders, and JPP, as administrative agent, entered into a Sixth Amendment (the “Sixth Mezzanine Loan Amendment”) to the Mezzanine Loan Agreement. Pursuant to the Sixth Mezzanine Loan Amendment, JPP and JPP II made an additional advance to the Mezzanine Loan Borrower in the aggregate amount of $75.0 million, which amount was secured by the Mezzanine Loan Collateral. As of July 25, 2018, after giving effect to such borrowings, the aggregate principal amount of the Mezzanine Loans outstanding, payable to JPP, JPP II and the other lenders party to the Mezzanine Loan Agreement, under the Mezzanine Loan Agreement was approximately $513.2 million.
The foregoing description of the Sixth Mezzanine Loan Amendment does not purport to be complete and is qualified in its entirety by reference to the Sixth Mezzanine Loan Amendment, attached hereto as Exhibit 99.71 and incorporated by reference herein.
On August 14, 2018, ESL delivered a letter to the Special Committee pursuant to which it submitted anon-binding proposal for the acquisition of Kenmore and SHIP (the “Bid Proposal”) and to update the Special Committee regarding its plans with respect to Parts Direct and certain other transactions, as well as tore-emphasize its firm belief that these transactions should be undertaken together with tender and exchange offers designed to allow Holdings to reduce its debt, extend its maturity profile and alleviate its liquidity challenges. The Bid Proposal indicates that ESL is proposing to acquire Kenmore in a cash acquisition based on a cash-free, debt-free enterprise value of $400 million, subject to adjustment in respect of the working capital and assets and liabilities of the Kenmore business at closing. The Bid Proposal notes that ESL has been discussing with potential partners their participation in the acquisition of Kenmore, and that the transaction would be conditioned on ESL’s receipt of equity financing from a potential partner on terms acceptable to it.