Sears Holdings Corp (SHLD) Annual Meeting: All About The $$

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Eddie Lampert: What We’ll Discuss At Sears’ Annual Meeting Of Stockholders via SHC Speaks

At last year’s Sears Holdings’ annual meeting, we talked about the differences between turnarounds, which occur when a company succeeds at doing what it did successfully in the past, and the transformations that happen when companies adapt their business model to fundamental shifts in technology, competitive landscapes or other macro trends to serve their customers in new ways.

We looked closely at the transformation of three legendary American companies: General Dynamics, Kodak and Apple (back when it was still called Apple Computer). Two succeeded because they saw how their customers and the market were changing, and fundamentally altered how they used their assets to adapt. Kodak failed because it had no way of getting, or unlocking, the money it needed to pay for the acquisitions and R&D investments it was making.

As important as it is to have a good plan and adapt to changing circumstances, you also need to find the resources to effect the transformation.

That’s a lot of what we’re going to discuss today.

I’ve said many times that one of my regrets in helping steerSears Holdings Corp (SHLD) Annual Meeting: All About The $$ and Kmart over the last decade is that we haven’t had or generated the money to fund our transformation quickly enough. While operational performance has been the cause of some of that, pension expenses, the recession and other factors have impacted us as well.

In Fiscal 2014, as I’ll go over today, we took big steps forward, generating $2.4 billion of liquidity from asset reconfiguration and financing activities. These included the Lands’ End spinoff, short-term loans that were secured by some of our real estate, a Rights Offering for 40 million Common Shares in Sears Canada and a Rights Offering for Senior Unsecured Notes with Warrants. We also completed a range of real estate transactions that generated additional liquidity for the company.

These $2.4 billion in funds from last year put us on better footing for the future, allaying any stray stakeholder concerns about us having enough money for the near future and allowing us to fund our company’s transformation much faster.

That’s only the beginning. This year, we believe we can derive even more value than we did last year.

Over the last six months, we’ve been working toward the formation of Seritage Growth Properties, a Real Estate Investment Trust that we expect will result in an excess of $2.5 billion in cash proceeds, further enhancing our financial flexibility. This transaction is expected to close in the second quarter of this year. Over the month of April, we also announced new Joint Ventures with Macerich, Simon Properties, and General Growth Properties, resulting in over $400 million in cash proceeds.

Taken together, these new funds will allow us to invest in long-term strategies to enhance our members’ experiences and expand our integrated retail platforms.

Sears and Kmart have already moved beyond the old and sorely outdated traditional store network models. Every day, we are building richer, deeper relationships with our members through Shop Your Way, Buy Online Pickup In Store, In-Vehicle Pickups & Returns, Digital Kiosks and more.

By raising such substantial capital in 2014 and 2015, we’ll now be able to accelerate our company’s transformation.

I will have a more to say today – and over the next year. Stay tuned.

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