Billionaire Edward Lampert withdrew about $756 million of assets from the hedge fund that he founded more than 20 years ago and will receive a second payout by the end of July, according to regulatory filings.
The hedge fund, ESL Partners LP, distributed part of its stakes in Sears Holdings Corp., AutoNation Inc., and AutoZone Inc. to Lampert and his partner William Crowley yesterday, the filings show. Other ESL affiliates distributed shares in the companies to Lampert yesterday, giving him a combined payout of about $864 million, based on today’s prices.
Lampert’s hedge-fund group, based in Greenwich, Connecticut, holds majority stakes in both Sears and AutoNation and owns about 37 percent of AutoZone’s shares outstanding. By distributing shares in the companies to Lampert rather than cash, the funds avoid sales that could disrupt the market for the stocks and generate tax bills for its investors.
“The internal restructuring transactions described herein,” ESL said in its filings with the U.S. Securities and Exchange Commission, “will result in direct ownership by Mr. Lampert and Mr. Crowley of a portion of their respective indirect ownership interests” in Sears, AutoZone and AutoNation.
Steven Lipin, a spokesman for ESL, declined to comment. The share distributions won’t change the overall stakes held by ESL and its affiliates, including Lampert, because they report their holdings on a combined basis, according to the filings.
ESL Partners plans to make a second distribution to Lampert after obtaining clearance under federal antitrust rules, the filings show. The filings included a June 2 agreement laying out the terms under which the “securities, cash and cash equivalents set forth on the books and records of ESL Partners LP” would be distributed to Lampert and Crowley by July 30.
Lampert set up the predecessor to ESL Partners in 1989 and holds an undisclosed stake in the fund through affiliates including RBS Partners LP. The hedge-fund group reported holding stocks with a market value of $12.3 billion as of March 31, with AutoZone, AutoNation and Sears accounting for about $11.4 billion of that. Holdings included Citigroup Inc., Genworth Financial Inc. and Capital One Financial Corp.
The hedge-fund group acquired Kmart Corp. through bankruptcy reorganization and merged it with Sears, Roebuck & Co. in a $12.3 billion deal completed in 2005, creating the nation’s largest department-store chain. Lampert is chairman of Sears, based in Hoffman Estates, Illinois.
According to one of the SEC filings, ESL Partners distributed 3.79 million Sears shares with a market value of about $316 million to Lampert and Crowley yesterday. Lampert received 3.72 million of the shares, Crowley 77,470.
The partnership also distributed 2.28 million AutoZone shares with a value of about $438.5 million to the two money managers. They got an additional 517,266 shares in the Memphis- based auto-parts retailer from a second fund, ESL Investments Inc., according to a separate SEC filing.
Lampert and Crowley received 665,660 AutoNation shares from ESL Partners, along with 491,929 shares from an affiliate called CBL Partners, the filings show. AutoNation, based in Fort Lauderdale, Florida, ranks as the largest new car dealer in the U.S.