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Table 1

Sears Holdings Assets Sold/Distributed to Shareholders from 2011-2015

Sale Date

12/2011

9/2012

11/2012

2005-2011

4/2014

7/2015

Remaining 5

Sears Re 6

Real Estate

Treasury Stock 7

Division

Orchard Hardware Sears Hometown Sears Canada N/A Lands End Real Estate

$10 Billion

$16 Billion

$5.9 Billion

 

Sale Price

Shareholder Benefit/Cost

Buyer

Million (s)

Spin-Off

N/A

1 Common/1 Preferred Share 1 (no cost)

Spin-Off

N/A

Right to Purchase .218091 Share of SHO

Spin-Off

$380M 2

Common shares of Sears Canada (no cost)

Sears Holdings

N/A

Stock Buy Backs $5.9 Billion 3

Spin-Off

500M

.30 share in Lands End (LE) (no cost)

Seritage Growth

$2.6 Billion

½ share of SRG per Share bought 4

Sales and Spin-offs and divisions and subsidiaries Table 2 summarizes Sears Holdings sales of divisions and/or Spin-Offs to Shareholders between December 2011 and December July 2015. In December 2011 Orchard Hardware was transferred to shareholders , Sears Hometown in September 2012, it trades under the Symbol (SHO) In November 2012 Sears Canada was transferred to Shareholders on a pro-rata basis, on April 2014 Lands End (LE) was transferred to shareholders through a public offering on a pro-rata basis and that company trades under the Symbol (LE) In July 2015 Sears sold 235 of it's stores to Seritage Growth Properties (SRG) a publicly traded Real Estate Investment Trust.

Shareholders were given a right to purchase ½ share in the REIT at $30 for every share of Sears Holding (SHLD) they owned. Also between the 2004-2011 Sears bought back 56.9 Million shares of common stock at an average cost of $103.70, the company spent $5.9 Billion buying back stock at an average price of roughly 5 times its current trading price. It's clear they see the value.

If f Sears liquidates after debt they still have roughly $32 Billion in assets which translates to a per share price of $286 which is roughly 13 Times the $22/ a share price, General Dynamics from 1991-1994 is our historical example of a similar situation and it is a once in a lifetime opportunity as Billionaire Bruce Berkowitz said when he bought Sears stock at over $40 a share.

1 Sears gave 1 Preferred share and 1 Common Share for every 22.141777 shares of Sears Holding stock

2 This amount was for only 49% of Sears Canada, Sears Holdings still owns 51% of Sears Canada

3 Repurchased stock is listed at cost on the books at cost and it is called Treasury Stock if it has not been canceled.

4 Currently Seritage Growth Properties (SRG) is trading at $39.00 and rights to purchase were at $30 dollars

5 The remaining assets do not include Goodwill, NOL'S or Sears inventory which collectively exceed 4 Billion

6 Sears Re owns KCD, LLC which owns Craftsman, Kenmore and Die Hard Brands and 235 K-mart/Sears Stores

7 Sears bought back $5.9 Billion dollars of stock between 2005-2011 this stock is carried on the books at cost not value.

Table 2

General Dynamics divisions sold in

1991-1993

Sale Date

 

Division

Buyer

11/91

Data Systems

CSC

2/92

Cessna

Textron

8/92

Missiles

Hughes Aircraft

11/92

Electronics

Carlyle Group

3/93

Military Aircraft

Lockheed

12/93

Material Services

n/a

12/93

Space Systems

Martin Marietta

Total:

Sale Price

in Millions

1991 Revenues in Millions

$

184

$12

600

797

450

1,385

52

218

1,525

2,719

 

46

n/a

209

363

$3,066

$5,494

Sales of divisions and subsidiaries Table 1 summarizes GD’s sales of divisions between November 1991 and December 1993. GD sold the Data Systems Unit to Computer Sciences Corp. for $184 million, the Cessna Aircraft subsidiary to Textron for $600 million, its missile business to GM’s Hughes Electronics subsidiary for $450 million, its Electronics Division to Carlyle Group for $52 million, and the lime and brick operations of its Material Services businesses for $46 million. To achieve the “critical mass” goal in GD’s core businesses, Anders began discussions with Lockheed to acquire its tactical military aircraft business to pair with GD’s Fort Worth Division. Lockheed rebuffed GD’s overtures but agreed that consolidation was necessary, and in December 1992 offered to acquire GD’s jet business for $1.525 billion. The divestiture of one of the company’s “core businesses” prompted speculation that GD was on a liquidation path. 8

In July 1992 Warren Buffet bought 14% of the outstanding stock a in General Dynamics, he

said in his annual letter 9 the same year “ We were lucky in our General Dynamics Purchase I paid

little attention to the company until last summer, when It announced it would repurchase about

30% of it's share through a dutch tender

But then I began studying the company and

accomplishments of Bill Anders in the brief time he'd been CEO 10 . And what I saw made my eyes

pop: Bill had a clearly articulated and rational strategy; and he had been focused and imbued with

s sense of urgency in carrying it out; and the results were truly remarkable.”

8 Jeff Cole, “Lockheed to Buy General Dynamics Fighter Plane Unit,” Wall Street Journal, December 10, 1992. 9 See Berkshire Hathaway Investor letter 1992 10 Bill Anders became CEO in January 1991