Lands’ End to Seek ABL Subsequent to Sears Spin-Off
Sears Holdings announced that its board of directors approved the separation of its Lands’ End business by means of a pro-rata spin-off transaction.
In connection with the spin-off, Lands’ End is pursuing an asset-based senior secured revolving credit facility, which would provide for maximum borrowings of approximately $175 million with a letter of credit sub-limit, and a senior secured term loan facility of approximately $515 million. Proceeds of the facility will be used to pay a $500 million dividend to a subsidiary of Sears Holdings immediately prior to consummation of the spin-off and to pay fees and expenses associated with the foregoing facilities of $15 million.
To effect the spin-off, Sears Holdings will distribute all of the outstanding shares of common stock of Lands’ End on a pro rata basis to holders of Sears Holdings common stock, except that holders of Sears Holdings’ restricted stock that is unvested as of the record date will receive cash awards in lieu of shares. These cash awards will be subject to vesting requirements.
The distribution will be made to Sears Holdings’ stockholders of record as of 5:30 p.m. Eastern time on March 24, 2014, the record date for the distribution. The distribution is expected to occur on April 4, 2014.
In the distribution, Sears Holdings stockholders will receive 0.300795 shares of Lands’ End common stock for each share of Sears Holdings common stock held as of 5:30 p.m. Eastern time on the record date. Fractional shares of Lands’ End common stock will not be distributed. Instead, fractional shares that Sears Holdings stockholders would otherwise have been entitled to receive after application of the foregoing ratio will be aggregated and sold in the public market by the distribution agent. The aggregate cash proceeds of these sales, net of brokerage fees and other expenses, then will be distributed pro rata to those stockholders who otherwise would have been entitled to receive fractional shares.
Following the spin-off, Sears Holdings will continue to be listed on the NASDAQ Global Select Market under the symbol “SHLD,” while Lands’ End expects to list its common stock on the NASDAQ Capital Market under the symbol “LE.”
Following the spin-off, Lands’ End will be a publicly traded company independent from Sears Holdings, and Sears Holdings will not retain any Lands’ End common stock.
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