S&P: Sears Canada unaffected

Standard and Poor's said the $11 billion merger of Sears, Roebuck and Co. (BBB/Watch/negative) with Kmart Holding Corp. (unrated) to form Sears Holdings Corp. has no immediate impact on the ratings of Sears Canada Inc. (BBB/negative), 54% of which is owned by Sears, Roebuck.

Although it is likely that the ratings for both Sears, Roebuck and its new parent Sears Holdings Corp. will be lowered by several notches to the BB category on completion of the merger, S&P said this rating action will be limited to the U.S. entities.

S&P said Sears Canada historically has been treated separately from its U.S. parent due to the autonomous nature of the Canadian operation that is governed by separate laws, has no intercompany debt, no meaningful upstream dividend, no cross guarantees on Sears Canada's debt with that of its parent, has a large minority shareholder base and has a business profile that is distinct.

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