Kmart, Sears work out terms of store transactions

By Staff -- Home Textiles Today, 9/3/2004 12:00:00 AM

TROY, Mich. — Kmart will sell 45 stores for $524.5 million in cash to Sears, Roebuck and Co., finalizing the exact terms of a deal that was inked in June.

The original deal allowed for the sale of up to 54 stores for $621 million in cash.

The sale of up to another 6 stores remains subject to unannounced conditions that must be met within the next 15 days, stated the companies. The cash proceeds from these 6 additional stores would total up to $65.3 million.

Julian Day, president and CEO of Kmart, said, "The stores we are retaining from the originally announced transaction are operating profitably. As has always been contemplated, Kmart will continue to operate those stores for which certain conditions related to the assignment of the store leases to Sears have not been met. We look forward to providing continued service to our customers at these locations."

Kmart will continue to operate the stores that will be sold to Sears until March or April 2005. Sears has agreed to consider offering employment to any Kmart employee who desires a position at the converted stores, stated the companies. Specific locations of the stores affected will be available once the transaction is finalized in the coming weeks.

Kmart expects to receive 30 percent of the final sales proceeds from Sears by Sept. 30. The remaining 70 percent of the final sales proceeds will be received by Kmart when Sears has taken occupancy of the properties, which is expected by April 15, 2005.