William Crowley, executive vice president and chief financial and administrative officer of Sears Holdings says the purchase agreement will allow Sears to focus more of its management attention and capital on the company's core business, namely its Sears and Kmart stores. Adding to the positive sentiment, David B. Kaplan, senior partner of Ares Management, said in a statement that the move would allow Acres to "assist the company in its expansion plans."
Orchard Supply Hardware is expected to issue approximately $405 million in debt as it relates to the agreement. Sears Holdings also announced that it expects its wholly owned subsidiary Sears, Roebuck and Co. to receive a $450 million dividend from Orchard.
In this transaction, which is expected to close in the fourth quarter, Citigroup Global Markets Inc. and Lehman Brothers Inc. acted as financial advisers to Sears. Simpson Thacher & Bartlett LLP provided legal counsel to Sears, and Proskauer Rose LLP provided legal counsel to Ares.
Sears purchased the Orchard chain in 1996 for $309 million, when the hardware retailer operated more than 60 stores. Today, the 74-year-old Orchard Supply Hardware chain operates 84 hardware and garden retail stores located throughout California. Sears Holdings Corp. is the nation's third largest broadline retailer, with approximately $55 billion in annual revenues, and with approximately 3,800 full-line and specialty retail stores in the US and Canada.
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