Sears Holdings (SHLD) is spinning off Sears Hometown and Hardware and Sears Outlet (SHOS) through a rights offering whereby existing SHLD holders received the right (SHOSR) to purchase 0.218091 shares of SHOS at $15 per share. SHOSR currently trades at around $2.80. So, the market expects SHOS to have a market value of $2.80*1/0.218091 + $15 = $27.84 per share when it starts trading in October. The deal should raise around $450M for the parent company (SHLD).
SHLD holders received this subscription right in early September and the worst option is doing nothing. In that case, the right would expire worthless on October 8th. In case you have SHLD in any of your brokerage or IRA accounts, this is the time to act. If ownership of a small-cap (~$500M) retailer with razor-thin margins (~3%) trading below book value with very low float (23M shares but majority owned by Eddie Lampbert's ESL) interests you, exercise the right. Otherwise, sell it before expiry!
In May 2012, Sears Holdings (SHLD) also announced to spin off Sears Canada (SEARF). Compared to the rights offering, this transaction was a breeze and did not require any specific action from SHLD holders. The SEARF shares showed up in the brokerage account automatically immediately after the completion of the spinoff on 11/14/2012. Here again, shareholders ended up with shares of a far less liquid entity. The spinoff worked as follows: SHLD holders received 0.4283 shares of SEARF for every share of SHLD stock held as of COB 11/01/2012.
Last Updated: 11/2012.
SHLD holders received this subscription right in early September and the worst option is doing nothing. In that case, the right would expire worthless on October 8th. In case you have SHLD in any of your brokerage or IRA accounts, this is the time to act. If ownership of a small-cap (~$500M) retailer with razor-thin margins (~3%) trading below book value with very low float (23M shares but majority owned by Eddie Lampbert's ESL) interests you, exercise the right. Otherwise, sell it before expiry!
In May 2012, Sears Holdings (SHLD) also announced to spin off Sears Canada (SEARF). Compared to the rights offering, this transaction was a breeze and did not require any specific action from SHLD holders. The SEARF shares showed up in the brokerage account automatically immediately after the completion of the spinoff on 11/14/2012. Here again, shareholders ended up with shares of a far less liquid entity. The spinoff worked as follows: SHLD holders received 0.4283 shares of SEARF for every share of SHLD stock held as of COB 11/01/2012.
Last Updated: 11/2012.
