Fairholme Buys 11.6% Stake in Sears Canada, Inc.

Fairholme Capital Management (FCM), the investment management firm headed by Bruce Berkowitz acquired 11.6% stake or 11,855,328 shares of Sears Canada, Inc. (NASDAQ:SRSC) based on its 13G filing with the Securities and Exchange Commission (SEC).

Details of Fairholme’s investment

Based on the filing, Mr. Berkowitz and various investment vehicles managed by Fairholme Capital Management owned 11,512,368 shares of Sears Canada, Inc. (NASDAQ:SRSC).

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Fairholme Partnership, LP owned 6,574,390 shares of the retailer. Mr Berkowitz has voting and dispositive power over all shares beneficially owned by Fairholme Capital Management as managing member of the firm.

The filing also indicated that Mr. Berkowitz beneficially owns 342,960 common shares of Sears Holding Corporation (NASDAQ:SHLD) in his individual capacity.

Sears Canada rights offering

Yesterday, Sears Holdings Corporation (NASDAQ:SHLD) announced that its rights offering of 40 million common shares of Sears Canada Inc. (NASDAQ:SRSC) has been oversubscribed. The rights offering closed on November 7.

Last month, Mark Cohen, a former chairman and CEO of Sears Canada Inc (NASDAQ:SRSC) commented that the Canadian retailer was a victim of Edward Lampert’s intent to liquidate the business.

Cohen said, “The Canadian business, which was perfectly healthy and profitable when I left, has been a victim of Lampert’s intent to essentially liquidate the business. It’s a tragedy.” Cohen is currently teaching at the business school of the Columbia University in New York

Sears disclosed plans to create REIT

Last week, Sears Holdings Corporation (NASDAQ:SHLD) disclosed its plan to convert 200 to 300 stores into a real estate investment trust (REIT). The struggling retailer intended to offer the REIT to shareholders to raise funds through a sales-leaseback deal.

The company recently sold one of its full-line stores in Cupertino, California and gained $103.5 million from the transaction.

Sears Holdings Corporation (NASDAQ:SHLD) also entered a leasing agreement with Primark. The agreement would allow the Dublin-based retailer to open stores inside Sear’s seven distressed stores in the northeast including the King of Prussia Mall near Philadelphia.

Last month, Sears Holding Corporation (NASDAQ:SHLD) stated its goal to raise at least $625 million through equity warrants and unsecured loan.

The shares of Sears Canada Inc. (NASDAQ:SRSC) were trading 9.76 per share at the time of this writing around 10:03 A.M. in New York. The stock price of Sears Holdings Corporation (NASDAQ:SHLD) is down by more than 2% to $37.86 per share.