I bought some. Here is why.
1. I think there are a number of significant assets left over. Assumption.
Based off of a Canadian shopping center study ("the study", URL: ) I found ~30 Sears Canada ("SRSCQ") locations that are in top Canadian malls. While I think some of them may or may not have been sold these 30 all are located in malls that have 300 or less s/sf. Additionally, the top 10 locations (Southgate Centre, Mapleview Centre, Guildford Town Centre, CF Carrefour Laval, Coquitlam Centre, Halifax Shopping Centre, West Edmonton Mall, Oshawa Centre and Kingsway Mall, Willowbrook Shopping Centre) all represent locations that have over $700 s/sf. With 4 of them over $900. And 1 over $1,100. The risk here is that SRSCQ doesn't actually own these properties and they were actually all sold. Ive briefly searched google news to see if they did but could find anything so this is a best effort thing.
Plus they own one Distribution Center. Estimates for that i think are $80-$40 which admittedly is high so lets just say $30m. Theres also $50m cash as of the most current report.
Anything else. Its Sears Canada theres lots of other properties that may range from $1m - $100k. Give them a -$10M value. I dont know I'm grabbing that out of my a$$.
2. CCAA Process so far to my understanding. More Assumptions. Lots of them.
The CCAA process to my understanding the DIP has been paid back and all properties under secured leases have been sold and all the secured debt of SRSCQ has been paid. That leaves pension problem and unsecured. According to the trustee website the unsecured, I think, is roughly near $300m CAD. This means that in addition to the $350m roughly in pension obligations there is $650m still outstanding in the bankruptcy. Also, estimate another $50m in fees. As of 1/26 there has already been $50m in fees associated with the process and if we "double" this we can assume there is another $50m in fees. I'm not experienced in this but lets just use that as a place holder.
The pension may have gotten a good kick from the Trump Rally this last year...the stock markets are up 30% so say the pension stock potion is up at least 20% on $294m in stock assets could close some of that gap. Also of note the actual pension part was only $112m unfunded. If the other benefits liability get reduced significantly then it could be beneficial.
Its tight but if some assumptions happen or some end up better than my hugely rough estimates there could be a tiny amount left over for shareholders. Then again there could not.
I own roughly 400k shares bought here for less than a penny per share. I bought some this winter when things were really bleak and Bruce was selling and some this jan...even thought the reports haven't come together.
It really depends on 1)I if the company still owns one more "puff" of assets and 2) How much can they milk out of the assets in the Great Bull Market. There's plenty of money out there and times are better than they've ever been. And Canadian CRE is not as over built as US CRE and amazon isnt in Canada as much yet....so even there its pretty good times.....Hopefully theres some suckers out there that want these before amazon comes to get them in the next 5 years or so.
Its chump change position but I think could hit but to hedge my bets on all this I think that this is almost certainly a doughnut. Things are not good at anything Sears these days so I would forget about seeing anything. Its a small position half of a percent or so. little less. so well see.
