Proceedings

Notice from the
Office of the Secretary

Ontario

Ontario Securities
Commission


20 Queen St. W.
Box 55, Suite 1900
Toronto, ON M5H 3S8
Commission des valeurs mobilières de l'Ontario

FOR IMMEDIATE RELEASE

October 23, 2006


IN THE MATTER OF THE SECURITIES ACT
R.S.O. 1990, c. S.5, AS AMENDED

-AND-

IN THE MATTER OF
SEARS CANADA INC.,
SEARS HOLDINGS CORPORATION,
AND SHLD ACQUISITION CORP.

-AND-

IN THE MATTER OF
HAWKEYE CAPITAL MANAGEMENT, LLC,
KNOTT PARTNERS MANAGEMENT, LLC, and
PERSHING SQUARE CAPITAL MANAGEMENT, L.P.

TORONTO – On August 8, 2006, the Commission issued its Reasons and Decision and made an Order (the “Cease Trade Order”) pursuant to subsections 104(1) and 127(1) of the Act that the offer to acquire (the “Offer”) made by Sears Holdings Corporation and SHLD Acquisition Corp. (collectively, the “Offerors”) for all of the outstanding common shares of Sears Canada Inc. (the “Common Shares”) be cease-traded until certain conditions are satisfied.

By notice of appeal dated August 9, 2006 , the Offerors have appealed to the Ontario Superior Court of Justice ( Divisional Court ) to set aside the Cease Trade Order. The Divisional Court dismissed the appeal on September 19, 2006 .

On September 27, 2006 , the Offerors filed a notice of motion for leave to appeal the decision of the Divisional Court to the Court of Appeal for Ontario . The parties to the motion have agreed to expedite the filing of materials with respect to the motion.

By an application dated October 13, 2006 (the “Application”), the Offerors requested that the Commission stay the Cease Trade Order pursuant to subsection 9(2) of the Act to the extent necessary to permit Sears Canada to hold the Meeting to vote on the subsequent acquisition transaction (SAT) prior to November 15, 2006 in order to preserve the Offerors’ rights pending the outcome of the appellate process .

BNS and Scotia Capital have advised the Offerors and the Commission of their position that Sears Holdings would be in fundamental breach of the Support Agreements if the Meeting is not held prior to November 15, 2006 and that BNS and Scotia Capital would no longer be subject to the restrictions in the Support Agreements committing them to vote their Common Shares in favour of the SAT and restricting them from disposing of their Common Shares.

The Offerors advised the Commission that in order for Sears Canada to call and hold the Meeting prior to November 15, 2006, Sears Canada must mail the Notice of Special Meeting of Shareholders and Management Proxy Circular (the “Proxy Circular”) by no later than October 24, 2006 and that, as a result of the stated position of BNS and Scotia Capital, an inability to hold the Meeting prior to November 15, 2006 would vitiate the Offerors’ appellate rights and prejudice the ability to complete the SAT if their appeal is successful

The Commission has determined that a stay of the Cease Trade Order, to the extent necessary to permit Sears Canada to hold the Meeting for Sears Canada shareholders to vote on the SAT, is necessary to preserve the Offerors’ rights pending the outcome of the appellate process.

The Commission made an Order which provides that the Cease Trade Order is stayed to the extent necessary to permit Sears Canada to hold the Meeting to vote on the SAT, subject to conditions. These conditions are designed to alleviate any potential confusion amongst shareholders of Sears Canada, to facilitate an early decision from the Court of Appeal on the Offerors’ leave to appeal motion, and to provide a list of Sears Canada shareholders to Hawkeye Capital Management, LLC, Knott Partners Management, LLC, and Pershing Square Capital Management L.P.

A copy of the Order and materials filed by the parties are available at www.osc.gov.on.ca.

OFFICE OF THE SECRETARY
JOHN P. STEVENSON
SECRETARY

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