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Sears Holdings Corp. (SHLD) Message Board

  • thorntttt thorntttt Jul 30, 2012 12:31 PM Flag

    spin off

    Haven't checked in here for awhile....has the spin off or perhaps more correctly stated, the separation and chance for the shareholders to buy a portion of the spin off, occurred yet? Anyone have an idea when it will occur? It would seem that there will be some value in this spin off at the price it is offered....Eddie has promised to buy any stares not taken by other shareholders and I doubt he would deal himself a bad hand in this controlling situation.

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    • The spin-off has not occurred yet, but, it will happen soon. I just finished reading the "S-1" on Sears Holdings website. I found that the Q & A section explained rights offering quite well. The income tax implications are interesting. The Fair Market Value (FMV) of the rights is going to be treated as a taxable dividend. Now, what is the FMV? Is the the full value of the rights offering- the full $600M or $6 per share for the Sears Holdings shareholders? Does anyone know?

      I find it interesting, and potentially expensive, that Eddie is having the spin-offs treated as taxable dividends. Other than Orchard Supply, Sears Hometown & Sears Canada are going to be treated as taxable dividends. Since Eddie & ESL are 62% owners, one would think that the tax planning is based upon Eddie's personal tax situation. He must believe that the 15% federal tax on dividends and capital gains is going up. Plus, he now lives in Florida, so that could be a factor.

      As far as the rights offering goes, I would think that it is a good idea to exercise your rights to obtain the shares of the Sears Hometown stores. Eddie and ESL are lined up to exercise any rights that are left on the table. Now, this is common for controlling shareholders.

      If anyone else can share any comments on the rights offering, please add them.

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