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 Sears Holdings Corp. had signaled that it would split the companies back in February. There are a total of 1,238 Hometown, Outlet and hardware stores as of April 28, according to Sears, which is trying to turn around its business and spruce up its image. It has already closed five Hometown stores, eight hardware stores and one Outlet store. Sears, which also owns Kmart, has looked at spinoffs and real estate sales to restore profitability and boost shareholder confidence. Aside from the separation of the Hometown, Outlet and some hardware stores, the company announced in May that it would spin off a stake in its Canada division.
In its filing with the Securities and Exchange Commission, Sears Hometown & Outlet Stores Inc. said that it expects to raise $346.5 million through a rights offering. In connection with the deal and prior to the separation, it will take out an asset-backed line of credit from which it will draw $75 million to $100 million to fund a cash dividend. That would bring the total proceeds to be paid to Sears Holdings to as much as $446.5 million and is in line with its previously stated goal of raising between $400 million and $500 million.
The news sent the company's stock up $2.94, or 5.7 percent, to close at $54.36 Monday.
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 Sears Chairman Edward Lampert's ESL Investments Inc. will own a majority stake in the business being spun off.
For fiscal 2011, the combined Sears Hometown, hardware and Outlet businesses had net income of $33.1 million on sales of about $2.34 billion. That compares with fiscal 2010 net income of $49.8 million on sales of approximately $2.35 billion.
Sears, based in Hoffman Estates, Ill., is set to report its second-quarter earnings Thursday.
The new company will be listed on the Nasdaq under the "SHOS" ticker symbol.
[Associated
Press]
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