Sears frees up another $625M in cash

Sears (NYSE:SHLD) announced that both the subscription period for its offering of up to $625 million in aggregate principal amount of 8 percent senior unsecured notes due 2019 and warrants to purchase shares of its common stock have expired.

Therefore, the company estimates that it will receive gross proceeds of about $625 million. Rights that were not properly exercised by 5:00 p.m. on Nov. 18 are no longer exercisable.

On Nov. 10, Sears similarly announced that its rights offering for up to 40 million shares of Sears Canada was oversubscribed and generated $380 million in cash proceeds.

So as of the end of Nov. 18, the company had about $1.1 billion available in cash.

"This capital will be used to support our continued transformation, as well as operational activities during the upcoming holiday and post-holiday season," wrote Rob Schriesheim executive VP and CFO for Sears, on the company's blog. "As you can see, we have been able to fund our peak inventory needs while we have demonstrated substantial financial flexibility by enhancing our liquidity and reducing our debt year-over-year. Despite constant misleading reports, all of our vendor and other obligations are being met in due course."

The company estimates that after the subscription agent has effected all allocations and adjustments, the agent will distribute the notes and warrants to holders who paid the full price, probably on or around Nov. 21. Then, the warrants will begin to trade on the market.

Schriesheim pointed out that Sears is not alone in its strategy, since companies such as General Electric, Goldman Sachs and Bank of America have secured capital from third-party investors through similar forms of transactions in order to enhance their financial flexibility.

"However, instead of raising capital from third parties, Sears Holdings offered our existing shareholders, via rights offerings, the first opportunity to participate according to their pro rata equity interest, so that all shareholders were treated equally," he noted.

In another push for cash, Sears is considering monetizing some of its real estate through the creation of a real estate investment trust (REIT). The company filed an 8-K regulatory filing with the Securities and Exchange Commission last week. Last month Sears also announced plans to sell most of its stake in Sears Canada, valued at $380 million, and Edward Lampert loaned Sears $400 million from his own hedge fund, ESL Investments.

For more:
-See this Sears press release
-See this Sears blog

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