December 7, 2017 / 1:08 PM / 2 years ago

Sears investor urges company to explore going private

FILE PHOTO: People take an escalator to a Sears store in Mississauga, Ontario, Canada, October 6, 2017. REUTERS/Mark Blinch/File Photo

(Reuters) - A Sears Holdings Corp SHLD.O investor on Thursday asked the struggling retailer to consider options including going private and investigate what it called an “unusually high volume” of short-selling in the company’s shares.

Switzerland-based Memento SA, an investor manager for shareholder Elarof Trust, also called for a temporary suspension of short-selling in Sears’ shares and urged the company to form an independent board committee to look after the equity interests of investors.

“We request the company provide its investors with adequate assurances that it is taking the steps necessary to effectively address the urgent problem of naked short selling in its shares by establishing sophisticated internal controls and seeking appropriate regulatory action,” Memento wrote in a letter to Sears’ board.

Sears was not immediately available for comment.

The Elarof Trust, which is owned by the Swiss-based Spadone family, holds nearly 2 million Sears shares.

Sears’ shares were up 10 percent at $4.56 on Thursday.

The company, which has racked up 24 straight quarters of sales declines and losses in most of those quarters as it loses out to online rivals, counts its billionaire Chief Executive Eddie Lampert as its biggest shareholder with about 32 million shares.

Memento also asked the company to seek an investigation by the Securities and Exchange Commission into the shortage of available shares in the marketplace and potential violations of the regulatory body’s rules on short selling.

Memento said it has retained Olshan Frome Wolosky LLP as legal counsel to advise on its engagement and discussions with Sears.

Reporting by Sruthi Ramakrishnan in Bengaluru; editing by Sai Sachin Ravikumar, Bernard Orr

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