To: E_K_S who wrote (50907 ) 2/14/2013 5:22:04 PM From: AFed 4 Recommendations Read Replies (2) | Respond to (OSH) Some good questions EKS -- here were my notes:Owned Property = OSH still has 7 stores remaining under which they own the RE & buildings. Historically they've been able to sell them to REITs & other property owners at an ~8% cap rate and ~$4m per store/lot. That's nice because it yields $28m of cash proceeds, but some of it will need to go back into tenancy improvements for the new store formats plus they'll start having to pay ~8% rates on the leases now that they didn't have to before. Since they're only paying ~5% rates on the non-Extended TL that comes due in Dec-2013 [which has to be paid off first per the latest creditor negotiations], these sale-leasebacks have not been particularly value-accretive despite the improved optics of the lower nominal debt levels.Lampert = both Lampert and Bruce Berkowitz (Fairholme) will have major says in any capital structure decisions. They own 40.4% and 12.5%, respectively. The decision of whether the Company restructures or conducts a rights offering will be determined (largely) by these two, and, honestly, I don't know which way they're leaning.Negative view : They both over-subscribed to the Sears Hometown & Outlets (SHOS) rights offering [which also has hardware/gardening retail stores], so they've "placed their bets," so to speak, on another horse.Positive view : The press will have a field day if this goes BK (I can see the headlines now: "Recent spin-off from Sears declares bankruptcy -- is Sears next?" That'll really be bad for the payment terms Sears will get with trade partners), so Lampert may pour more $$$ into OSH.Buy the Term Loan = I thought about this idea as well. Three quick observations:
