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Saturday, September 15, 2012 5:15:06 PM
The public offering to spin off the more than 1,100 Hometown and 122 Outlet stores should raise roughly $446.5 million for the Hoffman Estates-based retailer and is expected to be completed in the third quarter.
Beginning Sept. 7, stockholders will receive one transferable subscription right for each share of Sears Holdings common stock. Shares that are unvested by the close of business on Sept. 7, will receive a cash ward in lieu of subscription rights, the company said in a statement. The date of the distribution of the subscription rights is expected to be set by the board before Sept. 7, the company said.
That gives Chairman Edward Lampert, who owns roughly 62 percent of Sears Holdings, parent of Sears and Kmart stores, a stake of at least that much in the new company, according to regulatory filings. Under certain circumstances, Lampert may own 58 percent of the new company if the subscription rights are exercised in full, but will have an option to increase his stake by purchasing more subscription rights or Sears Hometown and Outlet stores shares.
Shareholders who exercise their subscription rights may also make a request to purchase additional shares of Sears Hometown common stock. If the subscription rights are exercised in full, Sears Holdings will cease to have any ownership interest in Sears Hometown.
As part of the transaction, Sears Hometown expects to enter into an asset-based senior secured revolving credit facility with a group of financial institutions to provide $250 million. Sears Hometown expects to draw $100 million under this facility to pay a cash dividend to Sears holdings before its separation, the company said.
Hometown stores are small hardware stores, usually operated by independent retailers. Outlet stores, which thrived during the recession, sell Sears merchandise at a discount. Sears announced its intention to spin off the stores in late February.
Sears shares have climbed $25.62, or 80 percent, this year.
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