DBRS Comments on Sears Holdings Acquisition of Sears Canada Shares

DBRS notes that Sears Holdings Corporation (Sears Holdings) has agreed to acquire approximately 18.7 million shares of Sears Canada Inc. (Sears Canada) to raise its ownership from close to 73% to about 90%. While this transaction does not have immediate credit implications for Sears Canada (Issuer Rating of BB), the transaction does raise questions about the next steps for the two companies and the remaining shareholders of Sears Canada.

DBRS’s current rating of Sears Canada already reflects the creditworthiness of its parent, Sears Holdings; the approximate $1.4 billion in cash and near cash on its balance sheet; and the fact that its $300 million in remaining debt matures this year. The possibility that Sears Holdings would increase its ownership has always been a factor reflected in the rating. Any subsequent events that could have credit implications will be considered at that time they occur.

Notes:
All figures are in Canadian dollars unless otherwise noted.

The applicable methodology is Rating Merchandisers, which can be found on the DBRS website under Methodologies.

This is a Corporate Rating.