Sears Holdings Corp. announced steps to reassure investors about its ability to pay down debt, sending its shares up 10 percent in premarket trade.
The operator of Sears department stores and the Kmart discount chain said it intends to separate its Sears Hometown and Outlet Businesses and certain hardware stores through a rights offering expected to raise $400 million to $500 million.
The rights will entitle holders to purchase shares in the combined Sears Hometown and Outlet Stores businesses and certain hardware stores and will be transferred to holders of Sears Holdings common stock.
Sears also said it had reached a deal to sell 11 stores to General Growth Properties Inc.
The actions come at a time when business lenders such as CIT Group Inc are keeping Sears on a tight leash.
"The actions of the asset sales and business separations of the outlets and hometown stores is management showing the Street that it can pull liquidity levers if it so chooses," Morningstar analyst Paul Swinand said.
Sales at the company have fallen every year since it was formed by hedge fund manager Edward Lampert in 2005 through the merger of two of the most iconic American chains in an $11 billion deal.
Sears reported a big quarterly net loss on Thursday after a poor showing during the holiday season. The net loss was $2.4 billion, or $22.47 a share, after a number of one-time charges, compared with a profit of $374 million, or $3.43 a share, a year earlier.
Excluding one-time items, Sears earned 54 cents a share.
Sales fell $518 million to $12.5 billion for the quarter, ended Jan. 28. Sales at its U.S. stores open at least a year fell 3.4 percent, including a 4.1 percent decline at its namesake department stores and a 2.7 percent fall at Kmart.
On Wednesday, the company's Canadian unit, Sears Canada Inc., posted a more than 50 percent drop in quarterly earnings.
"One of my big concerns is still Sears Canada, which was a jewel but is now looking like it's going south too," Swinand said.
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