Accelerated Share Repurchase Expected to Offset Convertible Preferred
Dilution
HAMILTON, Bermuda--(BUSINESS WIRE)--
Signet Jewelers Limited (NYSE:SIG), the world's largest retailer of
diamond jewelry, announced today that it has closed the previously
announced transaction with Leonard Green & Partners, L.P. (“LGP”), a
leading private equity firm, pursuant to which affiliates of LGP
invested $625 million in the form of convertible preferred shares. In
connection with the closing of the transaction, Jonathan Sokoloff,
Managing Partner of LGP, was added to the Signet board of directors.
Mark Light, Chief Executive Officer of Signet Jewelers said, “We are
pleased to welcome Leonard Green as a long-term strategic investor who
will provide a strong foundation to our shareholder base and bring added
retail and financial expertise to our board of directors. We view
Leonard Green’s significant investment in Signet as a strong vote of
confidence in our business and our long-term growth prospects, and we
look forward to working together to further grow and shape the Signet
portfolio of brands.”
The investment in Signet by certain funds affiliated with LGP is in the
form of convertible preferred shares that accrue a 5% p.a. dividend,
payable quarterly in arrears, in cash or by increasing the stated value,
at the option of Signet. The preference shares are convertible into 6.7
million Signet common shares based on a conversion price of $93.8712.
This represents a premium of 18% to the volume weighted average price of
the common shares for the 20 trading days following Signet’s second
quarter earnings announcement on August 25, 2016. LGP will be subject to
a two-year lock-up period (subject to certain exemptions) and Signet
will also have the right to force conversion after two years if the
volume weighted average price of Signet common shares is greater than
$164.2746 for 20 consecutive trading days.
Accelerated Share Repurchase to Offset Dilution
The Signet board, as previously disclosed, increased its authorized
share buyback program by $625 million on August 25, 2016. In connection
with today’s transaction, Signet has entered into an accelerated share
repurchase (“ASR”) agreement with J.P. Morgan Securities LLC, as agent
for JPMorgan Chase Bank, National Association, London Branch
(“JPMorgan”) in order to offset the convertible preferred share dilution.
Key features of the ASR, which will be funded by the proceeds of the
preferred share issuance, are as follows:
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Signet will repurchase its common shares at an aggregate purchase
price of $525 million.
-
The total number of common shares to be purchased ultimately by Signet
under the ASR will generally be based on the average of the daily
volume-weighted average prices of Signet’s common shares during the
term of the ASR minus a discount.
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Signet may receive, or be required to pay, a future price adjustment
upon final settlement of the ASR. The price adjustment may be settled
in cash or Signet’s common shares.
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The ASR is expected to be completed over approximately three months.
The balance of the authorized share repurchases, representing an amount
of $100 million, were made by the company on the open market at various
points prior to transaction close to offset dilution. Signet’s share
repurchase activity is expected to result in an EPS-neutral financial
transaction.
Advisory and consulting fees incurred in connection with the preferred
securities were approximately $13 million.
About Signet Jewelers and Leonard Green & Partners
Signet Jewelers Limited is the world's largest retailer of diamond
jewelry. Signet operates approximately 3,600 stores primarily under the
name brands of Kay Jewelers, Zales, Jared The Galleria Of Jewelry,
H.Samuel, Ernest Jones, Peoples and Piercing Pagoda. Further information
on Signet is available at www.signetjewelers.com.
See also www.kay.com,
www.zales.com,
www.jared.com,
www.hsamuel.co.uk,
www.ernestjones.co.uk,
www.peoplesjewellers.com
and www.pagoda.com.
Leonard Green & Partners, L.P. is a leading private equity investment
firm founded in 1989. Based in Los Angeles, the firm partners with
experienced management teams to invest in market-leading companies.
Since inception, LGP has invested in over 80 companies in the form of
traditional buyouts, going-private transactions, recapitalizations,
growth equity, and selective public equity and debt positions. The
firm’s primary sectors of focus are consumer/retail,
healthcare/wellness, business/consumer services, and distribution.
Select past and current investments include Whole Foods Market, Life
Time Fitness, Shake Shack, Activision, Jetro Cash & Carry, CHG
Healthcare, and Petco. For more information, please visit www.leonardgreen.com.
Safe Harbor Statement
This release contains statements which are forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of
1995. These statements, based upon management’s beliefs and expectations
as well as on assumptions made by and data currently available to
management, appear in a number of places throughout this document and
include statements regarding, among other things, Signet’s results of
operation, financial condition, liquidity, prospects, growth, strategies
and the industry in which Signet operates. The use of the words
“expects,” “intends,” “anticipates,” “estimates,” “predicts,”
“believes,” “should,” “potential,” “may,” “forecast,” “objective,”
“plan,” or “target,” and other similar expressions are intended to
identify forward-looking statements. These forward-looking statements
are not guarantees of future performance and are subject to a number of
risks and uncertainties, including but not limited to general economic
conditions, a decline in consumer spending, the merchandising, pricing
and inventory policies followed by Signet, the reputation of Signet and
its brands, the level of competition in the jewelry sector, the cost and
availability of diamonds, gold and other precious metals, regulations
relating to customer credit, seasonality of Signet’s business, financial
market risks, deterioration in customers’ financial condition, exchange
rate fluctuations, changes in Signet's credit rating, changes in
consumer attitudes regarding jewelry, management of social, ethical and
environmental risks, security breaches and other disruptions to Signet’s
information technology infrastructure and databases, inadequacy in and
disruptions to internal controls and systems, changes in assumptions
used in making accounting estimates relating to items such as extended
service plans and pensions, risks related to Signet being a Bermuda
corporation, the impact of the acquisition of Zale Corporation on
relationships, including with employees, suppliers, customers and
competitors, and our ability to successfully integrate Zale
Corporation's operations and to realize synergies from the transaction.
For a discussion of these risks and other risks and uncertainties which
could cause actual results to differ materially from those expressed in
any forward looking statement, see the "Risk Factors" section of
Signet's Fiscal 2016 Annual Report on Form 10-K filed with the SEC on
March 24, 2016. Signet undertakes no obligation to update or revise any
forward-looking statements to reflect subsequent events or
circumstances, except as required by law.
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Source: Signet Jewelers Limited