P.M. BRIEFING : Sears Expands Employee Stock Ownership, Cites Tax Break
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CHICAGO — Sears, Roebuck and Co. today announced an employee stock ownership plan that will buy up to $800 million worth of Sears common stock, expanding employee ownership of the company from 15% to 21%.
The ESOP will provide a cheaper way for the Chicago-based retailing and financial services company to fund its profit-sharing program because it can deduct dividends paid on the ESOP shares from its taxes, said Sears spokesman Douglas Fairweather.
The ESOP will buy the shares--which would number 21.8 million at Wednesday’s closing price of $36.62 1/2--over the next several months with money loaned by the company.
The loan will be repaid over the next 15 years from dividends on the ESOP shares and future contributions to the profit-sharing plan, Fairweather said.
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