SearsCanada
Joined: 29 Mar 2006
Posts: 1236
Location: Ontario, Canada
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Posted: Mon Jul 24, 2006 1:30 am Post subject: dividend, after a long wait...
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News from globeandmail.com
Friday, June 23, 2006
Eatons shareholders finally getting their payout -- 81.86 cents
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PAUL WALDIE
Nearly seven years after Eatons shut its stores across Canada, thousands of shareholders are about to finally get some money for their investment -- 81.86 cents a share, to be exact.
That's a far cry from the $15 that T. Eaton Co. Ltd. shares sold for when the company went public on June 1, 1998.
But in the words of Gus Tertigas, of RSM Richter Inc., which is handling the share liquidation: "Something is better than nothing."
Next Friday, Mr. Tertigas will send out cheques totalling $20-million to Eatons shareholders. More than half of that money, about $11-million, will go to members of the Eaton family who owned around 52 per cent of the company's shares.
The payment marks the end of the Eatons saga, which began in 1856 when Timothy Eaton opened his first store in St. Marys, Ont.
The company filed for bankruptcy protection in August, 1999. Under a restructuring plan reluctantly approved by creditors in December, 1999, Sears Canada Inc. bought 19 Eatons stores for $80-million.
Sears directed $20-million of the purchase price to Eaton's shareholders in return for the use of the company's cumulative tax losses, estimated at the time to be roughly $175-million. The $20-million was to be held in escrow by Richter, the court-appointed liquidator, until the tax losses were used up by Sears.
The unusual move angered many Eaton's creditors, who received about 48 cents on the dollar for their debt, and even drew criticism from the judge overseeing the bankruptcy protection.
"What is of concern is the question of the size of the pot going to the shareholders," Mr. Justice James Farley said at the time.
Officials from Richter explained that the company's board of directors felt the payment to the shareholders was necessary in order win approval of the restructuring plan.
In the end the payment and the plan were adopted.
Sears kept seven Eatons stores open and converted the others into Sears.
But after barely two years, the company pulled the plug on the Eatons division, closing several stores and switching the remainder to Sears.
Sears used up the tax losses by May, 2001. Mr. Tertigas said the Canada Revenue Agency had five years from that date to appeal the company's use of the losses and as a result, Richter could not distribute the $20-million to shareholders until the appeal period expired.
That happened on May 27, 2006, and a few days later Richter won court approval to release the cash on June 30.
Mr. Tertigas couldn't say how many shareholders are out there -- "it's in the thousands" -- but Richter has sent each a letter of notification about the payment.
Some who had forgotten about their Eatons shares have been calling him for more details. "I get about 20 calls a day," he said.
Some money is being held back to cover fees related to the liquidation and there could be a final small distribution to shareholders later this year, he added.
But for all intents and purposes, Mr. Tertigas said, next week's payment "will be the last chapter of Eatons."
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One hell of an investment. $80 M for the real estate and $170 M worth of tax credits. Those should have been some prosperous years for sears Canada.
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