TORONTO — Sears Holdings Corp. (NYSE:SHLD) is selling most of its stake in its Canadian unit to raise as much as US$380 million and increase its cash holdings ahead of the crucial holiday shopping season.
The sale of about 40 million shares of Sears Canada to shareholders of Sears Holdings — including financier Edward Lampert and ESL Investments Inc., a private company that he controls — will give the publicly traded U.S. retailer some breathing room but reduce it to a minority shareholder in its Canadian counterpart.
The Chicago-area company — which owns the Sears and Kmart retail chains in the United States — expects at least US$168 million in proceeds in mid-to-late October, with the rest by early November. Lampert and ESL have told Sears they intend to exercise their option to acquire a proportional amount of the subscription rights.
Sears Holdings currently owns about 51 per cent of Sears Canada’s stock. ESL is the Toronto-based company’s second-largest shareholder with about 27.6 per cent of Sears Canada’s stock.
ESL, a Florida-based fund manager controlled by Lampert, is also the largest shareholder of Sears Holdings with 24.8 per cent while Lampert directly owns 23.7 per cent of Sears Holdings.
Fairholme Capital Management — which controls about 24 per cent of Sears Holdings stock — has also indicated that some its clients will also take part in the Sears Canada subscription rights offering.
The Sears Canada subscription rights are expected to be tradable and can be used to buy Sears Canada shares at C$10.60 each — a…