Sears notes lower as investors weigh proposed restructuring; Neiman Marcus notes flat

By James McCandless

San Antonio, Sept. 25 – Tuesday trading in the distressed debt market saw more scrutiny placed on retail names.

Sears Holdings Corp.’s notes declined as investors weigh the prospects of a restructuring proposed by CEO Eddie Lampert’s ESL hedge fund on Monday.

The 6 5/8% notes due 2018 lost about 4½ points to close at 88½ bid. The 8% notes due 2019 dropped 7 points to close at 27 bid.

On Monday, the 6 5/8% notes lost 1¾ points and the 8% notes fell 1¼ points.

Lampert announced a two-part plan to address the company’s debt on Monday. The plan includes options for restructuring its debt, swapping debt for convertible securities, and selling $1.5 billion of its real estate holdings. Lampert advised the board that “immediate action” was needed to address the company’s financial situation.

“To hear that they have that much real estate that they weren’t doing anything about until now is a little surprising,” a trader said. “But at least they look like they’re trying.”

In other trading, Neiman Marcus Group, Inc.’s debt issues were flat. On Friday, an investor accused the company of being in default after a recent private transfer of equity in a subsidiary.

The 7 1/8% notes due 2028 were unchanged at 84 bid.

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