TORONTO, Oct. 11, 2013 /CNW/ - Sears Canada Inc. (TSX: SCC) is
announcing today that it has entered into a binding agreement with
Concord Pacific Group of Companies ("Concord") to pursue the
development of the Sears site located at the Metropolis at Metrotown in
Burnaby, British Columbia. Closing under the agreement is conditional
upon satisfaction of conditions such as site investigations, strategic
considerations relating to the project, and obtaining the approval from
the City of Burnaby for the project, which is expected to take some
time. On June 7, 2013, Sears announced that it had submitted an
application to the City of Burnaby regarding nine acres of the
Company's property on and adjacent to its store at that location.
In its June 7 announcement, Sears stated it was seeking approval to
develop a comprehensive mixed-use project including the construction of
a new Sears department store to replace the existing store. The vision
of the redevelopment is a major urban-infill project consisting of
seven residential and office high-rises along with ground-level retail.
Concord brings its development experience, depth and diversity to the
joint arrangement. Concord develops comprehensive multi-phased urban
communities across Canada including Concord Pacific Place in Vancouver
and CityPlace in Toronto, Canada's largest and second largest urban
communities respectively.
"We are pleased to join with Concord on this significant project," said
Doug Campbell, President and CEO, Sears Canada Inc. "The possibilities
for this location as Concord and Sears have conceptualized it are very
exciting. We look forward to working together and moving the project
forward."
The arrangement contemplates the sale of a 50% interest in the site for
a value of approximately $140 million, subject to adjustments, and the
retention of Concord on customary terms to manage most facets of the
development. $15 million of the purchase price is to be paid in cash
on closing, with the balance represented by an interest-free long term
note secured by Concord's 50% interest in the property, the principal
of which is expected to be repaid out of cash flow over time. It is
contemplated that this note will be subordinated to other debt
financing expected to be raised and used to develop the project. The
note will be guaranteed by a Concord affiliate. Following the transfer
of the 50% interest, the parties would enter into a co-ownership joint
arrangement. If third party debt financing cannot be obtained, Concord,
and not Sears, will be responsible for providing debt financing to
develop the project (which would, with certain exceptions, be
subordinated to the long-term note held by Sears). The estimated cost
to fully develop and build out the project as contemplated is currently
in excess of $1 billion dollars in 2013 dollars.
Sears reminds the public that, given the very early stage the project is
in today, there has been no determination as to capital or other
expenditure required, if any. In addition, it is too early to tell
whether or not the project will be completed given a multitude of
potential factors, both internal and external, such as the economic
value to the Company, obtaining approval of the project from the City
of Burnaby, shifts in the Canadian economy, and the condition of the
real estate market now or in the future, during this multi-year
endeavour.
Sears Canada is a multi-channel retailer with a network that includes
181 corporate stores, 246 Hometown stores, over 1,400 catalogue and
online merchandise pick-up locations, 101 Sears Travel offices and a
nationwide home maintenance, repair, and installation network. The
Company also publishes Canada's most extensive general merchandise
catalogue and offers shopping online at www.sears.ca.
SOURCE Sears Canada Inc.
