Replies to post #14891 on Sears Holdings Corp. (fka SHLDQ)

[LQMTinvestor2018]

Yep exactly, I don’t understand these shorts, it’s stated right there!

[StrategyTrader]

What does that mean so if you have for example 100k shares what will it be worth ?

[justthefactsmam]

Your statement that there is “SEC filing proof that Holdings Common Stock will be used in the near future: Conversion price: $5 for 200 shares in exchange for $1000 of debt” is not only misleading, but inaccurate.

You have chosen to make a mathematical calculation as to what the breakeven share price would need to be but that is not what the filing says. Instead the sec filing clearly states:
_________________________________________________________________

Loan may be converted into shares of Holdings Common Stock at the option of an eligible holder at a conversion rate of 200 shares of Holdings Common Stock per $1,000 in principal amount of indebtedness outstanding under the Second Lien Term Loan (subject to adjustment)
____________________________________________________________________

That indebtedness could be converted now and $1000 of indebtedness could be exchanged for 200 shares of shldq which at Friday’s closing price of $0.5801 would mean receiving stock worth slightly over $116 in exchange for giving up $1000 of a debt instrument.

Now, maybe it is possible that esl is making nice with these debtholders and indicating there could be an ipo of newco which could be exchanged for debt and it is possible that ipo would be priced at or in excess of $5/share which would make going along with esl’s bid a better bet for debtholders than challenging his offer in court and pushing for liquidation.

since part of esl's bid is extinguishing the debt owed to esl by shc, he needs to get those other debtholders on board. even extinguishing his debt allows esl to keep firm control of common shares.

[Emptyhead]

To be fair, that doesn’t make sense. It would be far cheaper to purchase the shares on the open market as per the close on a Friday at $.58

[cottonisking]

Review: Buyers Election in NOTICE OF SUCCESSFUL BIDDER AND SALE HEARING DOCKET 1730



**** Old Post ****

Normally, Q Stocks trade and are not converted or canceled, in a Chapter 11, until the confirmed bankruptcy plan's effective date. See December 1, 2019 date or 15 day notice below. ESL/affiliates (buyer) will make an election to receive sears'(seller) tax attributes.

*** google

"[PDF] 201750006 - IRS.gov
https://www.irs.gov/pub/irs-wd/201750006.pdf - Cached
15 Dec 2017 ... 1.382-2T(f)(13), and the remaining I of Company's stock (by value) was owned by
... the 50% test in sections 382(l)(5)(A)(ii) and 382(l)(5)(E)."

*** google


"Section 368 Subsection Type of Restructuring
368(a)(1)(A) Tax-free mergers and consolidations
368(a)(1)(B) Stock-for-stock exchanges
368(a)(1)(C) Stock-for-asset exchanges
368(a)(1)(D) Divisive reorganizations

3 more rows
Section 368 - Tax Free Reorganizations for Federal Income Tax"


**** Docket 1730


"18-23538-rdd Doc 1730 Filed 01/18/19 Entered 01/18/19 22:46:50 Main Document
Pg 1 of 315

NOTICE OF SUCCESSFUL BIDDER AND SALE HEARING

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WHEREAS, the Parties desire and intend that the transactions set forth in this Agreement,
together with the Bankruptcy Plan (as defined below), will, unless Buyer elects otherwise pursuant
to this Agreement, (i) constitute one or more plans of reorganization under section 368(a) of the
Code (as defined below) and as qualifying as one or more reorganizations thereunder and (ii)
satisfy the ownership requirements set forth in section 382(l)(5)(A)(ii) of the Code."

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"Section 9.2 Tax-Related Undertakings and Characterization of the Transaction.

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(c) Buyer (or its regarded owner for U.S. federal income Tax purposes, if applicable)
shall make (if not previously made) a valid election, effective on or prior to the Closing Date, to
be classified as an association taxable as a corporation for U.S. federal income Tax purposes
(unless one or more Affiliated Designees shall acquire all of the Acquired Assets and assume all
of the Assumed Liabilities). Buyer shall cause any Affiliated Designee (or its regarded owner for
U.S. federal income Tax purposes, if applicable) to be classified as a corporation or an association
taxable as a corporation for U.S. federal income Tax purposes at all times during the period
beginning on the Closing Date and ending on the effective date of the Bankruptcy Plan."


****

"Section 2.12 Tax Reorganization.

(a) The Parties intend that the transactions set forth in this Agreement, asstructured and
implemented as described in Section 9.2(a), together with the Bankruptcy Plan (as defined below),
will, unless and except to the extent that Buyer elects otherwise with respect to a particular Seller
or Sellers pursuant to Section 2.12(b), (i) constitute one or more plans of reorganization under
section 368(a) of the Code (as defined below) and (ii) as qualifying as one or more reorganizations
thereunder (a “Tax Reorganization”).

Entered 01/18/19 22:46:50 Main Document
Pg 69 of 315
50
(b) Buyer may, at any time on or before the earlier of (i) 15 days prior to the effective
date of the Bankruptcy Plan and (ii) December 1, 2019, elect, by providing to Sellers written notice
of its election, to treat one or more of the transactions (each, a “Designated Sale Transaction”) set
forth in this Agreement as not qualifying as a Tax Reorganization, which election shall be effective
unless Designated Tax Advisor cannot provide a Tax Opinion that such Designated Sale
Transaction can be completed in a manner that would not be treated as a “reorganization” within
the meaning of section 368 of the Code; provided, however, that in connection with any such Buyer
election to treat all the transactions described in this Article II as Designated Sale Transactions
(resulting in no transfer of Sellers’ Tax attributes to Buyer), the Parties shall, if requested by Sellers
in writing, identify a business of the Sellers that would become part of the Excluded Assets and
consider in good faith any other changes to the structure of the transaction that are reasonable and
necessary as a commercial, bankruptcy law and other legal matter to achieve that result. If Buyer
does not elect pursuant to this Section 2.12(b) to treat all the transactions described in this Article II
as Designated Sale Transactions (resulting in no transfer of Sellers’ Tax attributes to Buyer), or
any such election is not effective, then Buyer and Sellers shall continue to comply with
Section 9.2(a)."