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SEARS CORPORATE ACTION TO ENHANCE VALUE, REDUCE DEBT

 SEARS CORPORATE ACTION TO ENHANCE VALUE, REDUCE DEBT
 CHICAGO, Sept. 29 /PRNewswire/ -- Sears, Roebuck and Co. (NYSE: S)


today announced significant corporate actions designed to open up ownership of its major financial services businesses to the public and to reduce debt.
 Sears said the actions will enhance value for shareholders by creating separate, publicly traded companies enabling shareholders and other investors to participate directly in Sears successful financial services franchises. In addition, Sears said these actions will reduce its debt by more than $3 billion and lower its ongoing financing requirements.
 "Our financial services strategy has been a resounding success," said Sears Chairman and Chief Executive Officer Edward A. Brennan. "A thorough assessment of today's economic and business climate led us to conclude that refocusing our business strategy, changing our structure, and reducing leverage are all in the best interest of our shareholders and Sears."
 He noted that Sears financial services businesses generated $9.5 billion in revenues in 1982. By 1991 those revenues had grown to $26 billion.
 Sears said the major actions taken by the board were the result of several months of study and numerous meetings. The board and management worked with Goldman Sachs & Co. to develop these actions, with additional assistance from Morgan Stanley & Co. The actions are:
 -- Sears intends to sell, through a primary initial public offering expected to occur during the first quarter of 1993, a minority interest of up to 20 percent in Dean Witter Financial Services Group. This includes the Dean Witter Reynolds securities firm and Discover Card. Sears said that following the initial public offering, it intends to distribute to Sears, Roebuck and Co. shareholders the balance of its ownership in Dean Witter in a tax-free spin-off later in 1993.
 -- Sears intends to sell, through a primary initial public offering during the next 12 months, a minority interest of up to 20 percent in Allstate Insurance Group. Sears said it will continue to own 80 percent or more of Allstate and has no intention of disposing of this interest.
 -- Sears intends to sell, in a public or private transaction, its Coldwell Banker Residential Services businesses, consisting of the residential brokerage and relocation businesses, Sears Mortgage Corp. and Sears Savings Bank. An offering memorandum will be available in the fourth quarter. Sears will retain Homart Development Co.
 These actions are subject to a favorable tax ruling or opinion relating to the Dean Witter spin-off, required regulatory approvals, market conditions and final approvals by the Sears board of directors.
 Following completion of these transactions, Sears will focus on its two remaining core businesses, Sears Merchandise Group and Allstate. The major properties owned by Sears will consist of domestic retail stores, catalog and credit operations of Sears Merchandise Group; 61 percent ownership of Sears Canada and 75 percent ownership of Sears Mexico; 80 percent or more of Allstate; Homart Development Co.; ownership interests in Prodigy, a joint venture with IBM, and ADVANTIS, a proposed joint venture with IBM; and various real estate properties. In 1991 these businesses generated revenues of approximately $51 billion of Sears total consolidated revenues of $57 billion.
 Brennan said, "These transactions should not impair the ability of Sears, Roebuck and Co. and Dean Witter Financial Services Group to pay annual dividends that, in the aggregate, approximate the current $2 per share level. Each board, however, will declare dividends based upon its assessment of the performance and financial requirements of its business."
 Brennan said, "We have consistently said that our board periodically reviews the structure of Sears to ensure that we are enhancing shareholder value. Our action is a result of intensive study and will permit our shareholders to participate more directly in our financial services achievements, improve shareholder value, and strengthen our balance sheet. In an era of increasing competition, we believe less- leveraged companies will have an important advantage. Additionally, these actions and resultant structure will foster a better appreciation in the market of the true value of the individual businesses."
 Brennan said the actions accomplish several important objectives:
 -- Spinning off ownership of Dean Witter enables Sears stockholders to realize the significant value created over the past 10 years and to share in the future growth of this business.
 -- Creating a public market for Allstate unleashes the public trading value of a great American insurance company for the benefit of Sears shareholders. At the same time, retaining 80 percent or more of Allstate allows Sears to reap many of the benefits of its current structure.
 -- Applying proceeds from these transactions will reduce corporate- level debt by more than $3 billion and will materially improve leverage ratios. Much of this debt was incurred to finance the growth of these financial services businesses.
 Brennan said, "The debt reduction will be an advantage in an environment where creditworthiness is essential and businesses must maintain flexibility to reposition themselves in response to changes in the competitive landscape."
 Reviewing the growth in Sears financial services, Brennan said the Discover Card, introduced almost seven years ago, commands the second highest market share in the credit card industry. Over 40 million cardholders have generated receivables with a current balance of more than $15 billion. Dean Witter, which manages almost $60 billion of customer investment funds, has been one of the most consistent profit performers in the securities industry. Allstate, with assets of almost $50 billion, has grown at a compound revenue growth rate of 15 percent during the past 10 years and is the world's second largest personal property and casualty insurer. Allstate also has a growing life insurance business. Sears Mortgage is now the sixth largest originator of home mortgages with more than $25 billion in servicing and Coldwell Banker Residential brokers participate in the sale of one of every nine homes in the U.S.
 "These achievements are the reasons for the pride we take in our successful financial services diversification strategy," Brennan said.
 Brennan said the debt reduction will also strengthen and increase the flexibility of Sears retail business as the company focuses on continued improvement in its merchandise group under the leadership of its new Chairman and Chief Executive Officer Arthur C. Martinez who joined Sears Sept. 1.
 "In a two-year period in which the country has seen low levels of consumer confidence and a prolonged recession, and in which the retail industry has seen intense competition, we have laid the foundation for improved performance in our merchandise group," Brennan said. "Much remains to be done and Arthur Martinez in the coming months will take the necessary actions to make the merchandise group more effective and profitable."
 Brennan noted that the merchandise group over the past two years has embarked on new marketing and merchandising programs, eliminated more than 48,000 positions, reduced annual costs by about $1 billion, streamlined its management structure, continued to roll out its power format strategy and introduced a "pure selling environment" initiative to improve customer service. "We will be working hard to build on that base," Brennan said.
 In conclusion, Brennan said, "We believe the actions we are announcing today make Sears a stronger company both now and for the future. They not only recognize Sears past successes, but present new opportunities in the future for the company, its shareholders, employees and each of our businesses."
 Sears shareholders may call 1-800-752-1911 between 9 a.m. and 5 p.m. (central time zone) if they have questions about the proposed transactions.
 -0- 9/29/92
 /CONTACT: Gerald Buldak of Sears Roebuck and Co., 312-875-8371/
 (S) CO: Sears, Roebuck and Co. ST: Illinois IN: REA SU:


TS -- NY019 -- 4247 09/29/92 09:23 EDT
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