UPDATE: Sears Holdings Provides Update On Status Of Separation Of Its Sears Hometown And Outlet Businesses
Sears Holdings Corporation (NASDAQ: SHLD) announced that, in connection with its previously announced rights offering transaction, Sears Hometown and Outlet Stores, Inc. filed today a registration statement on Form S-1 with the Securities and Exchange Commission. The rights offering transaction will effect the separation of the Sears Hometown and Outlet businesses from Sears Holdings. The rights will be distributed to holders of Sears Holdings' common stock and entitle holders to purchase shares of common stock of Sears Hometown and Outlet.
As previously announced on February 23, 2012, Sears Holdings expects that the separation of these businesses will raise approximately $400 million to $500 million in proceeds for Sears Holdings and provide it with additional liquidity. Sears Holdings intends to use these proceeds for general corporate purposes. The separation will also enable Sears Holdings to focus on its core business.
Furthermore, although a decision has not been made whether Sears Hometown and Outlet will incur any indebtedness as part of this separation, Sears Hometown and Outlet may elect to incur indebtedness in connection with the separation transaction. If Sears Hometown and Outlet were to incur such indebtedness, it is expected that the $400 million to $500 million in proceeds that Sears Holdings expects to raise as part of the separation of these businesses would not change, as all or a portion of that indebtedness would be used to fund a cash dividend to Sears Holdings that would be paid immediately prior to the consummation of the rights offering.
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