Sears Holdings Corp. yesterday unveiled a series of proposed deals to replace current debt obligations held by its chief executive and outside investors with new securities payable in debt rather than cash, WSJ Pro Bankruptcy reported. The Hoffman Estates, Ill.-based retailer said that it would ask holders of roughly $930 million in bonds maturing through 2019 to swap their claims for new convertible debt that can be paid in kind, meaning through new debt, at Sears’ discretion. Fitch Ratings Inc. said it viewed the proposed transactions as a distressed-debt exchange and downgraded Sears yesterday to C, the lowest ratings notch above outright default. Roughly $600 million of those bonds were held by either Sears CEO Edward Lampert and his investment fund ESL Investments Inc. or by longtime company backer Fairholme Capital Management as of last January, according to previous Sears securities filings. It wasn’t clear if those holdings had changed since then.
