Completes Sale of Existing Non-Prime Receivables and Implements
Forward-Flow Non-Prime Receivables Purchase Arrangement
Continues to Expect $475 million in Share Repurchases in Fiscal
2019
HAMILTON, Bermuda--(BUSINESS WIRE)--
Signet Jewelers Limited (“Signet”) (NYSE:SIG), the world’s largest
retailer of diamond jewelry, announced today the completion of the final
phase of its strategic outsourcing of credit through the sale of its
existing non-prime receivables and implementation of a forward flow
purchase arrangement for future non-prime receivables with funds managed
by CarVal Investors and Castlelake, L.P.
With the closing of this transaction, Signet has transitioned to a fully
outsourced credit structure while maintaining a full spectrum of
category-leading financing and lease options for consumers. The
outsourced credit structure allows the company to enhance its strategic
and operational focus on its core jewelry retail business as it executes
the Signet Path to Brilliance transformation plan. In addition, the sale
of the credit accounts receivable significantly reduces Signet’s balance
sheet risk and lowers working capital needs, as well as enabling the
company to return significant capital to shareholders.
At closing, Signet sold 70 percent of its existing non-prime receivables
to funds managed by CarVal Investors and the remaining 30 percent to
funds managed by Castlelake,
L.P. Under the previously announced agreements, CarVal and
Castlelake will also purchase newly originated receivables arising from
Signet’s non-prime accounts at a discount rate as determined in the
agreements. Investment funds managed by CarVal Investors will purchase
70 percent of the forward flow non-prime receivables and funds managed
by Castlelake L.P. will purchase 30 percent of the forward flow
non-prime receivables.
Signet received $445.5 million in cash proceeds from the sale of
existing non-prime receivables excluding transaction costs, net of a 5
percent holdback. The holdback may be paid out at the end of two years
depending on the performance of such receivables in that period. The
company expects to use the proceeds, along with cash on hand, to
repurchase shares. Signet continues to expect to repurchase $475 million
in shares in Fiscal 2019 of which $60 million was repurchased in the
first quarter of Fiscal 2019.
The sale of the non-prime portion of Signet’s credit portfolio follows
the previously executed prime credit transaction and strategic
partnership with ADS, the implementation of our lease financing option
through Progressive Leasing, and the outsourcing of the servicing of the
non-prime credit program to Genesis Financial Solutions, Inc.
There are no customer or store-facing systems integration activities
required of Signet with respect to this transaction and the Company does
not expect any changes to the current credit application process for
non-prime customers.
About Signet
Signet Jewelers Limited is the world's largest
retailer of diamond jewelry. Signet operates over 3,500 stores primarily
under the name brands of Kay Jewelers, Zales, Jared The Galleria Of
Jewelry, H.Samuel, Ernest Jones, Peoples, Piercing Pagoda, and
JamesAllen.com. 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,
www.pagoda.com,
and www.jamesallen.com.
About CarVal Investors
CarVal Investors is a leading global
alternative investment fund manager focused on distressed and
credit-intensive assets and market inefficiencies. Since 1987, CarVal
has invested $104 billion in 5,300 transactions across 79 countries.
CarVal Investors employs over 160 people in the U.S., Europe and Asia,
including 73 investment professionals with specialization in distressed
corporate securities, liquidations, loan portfolios and structured
credit. For more information, please visit www.carvalinvestors.com.
About Castlelake
Castlelake, L.P. is a global private
investment firm focused on investments in alternative assets,
sub-performing notes, dislocated industries and special situations, and
is an experienced leader in aircraft ownership and servicing. With
primary offices in Minneapolis and London, the Castlelake team comprises
more than 130 professionals. As of March 31, 2018, Castlelake manages
private funds and debt vehicles with approximately $13 billion in
assets, on behalf of its investors, including endowments, foundations,
public and private pension plans, private funds, family offices,
insurance companies and sovereign wealth funds. For more information,
please visit www.castlelake.com.
Signet Safe Harbor
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, our
ability to implement Signet's transformation initiative, the effect of
federal tax reform and adjustments relating to such impact on the
completion of our quarterly and year-end financial statements, changes
in interpretation or assumptions, and/or updated regulatory guidance
regarding the U.S. tax reform, the benefits and outsourcing of the
credit portfolio sale including technology disruptions, future financial
results and operating results, the impact of weather-related incidents
on Signet’s business, the benefits and integration of R2Net, general
economic conditions, potential regulatory changes or other developments
following the United Kingdom’s announced intention to negotiate a formal
exit from the European Union, 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, the development
and maintenance of Signet’s omni-channel retailing, 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, an adverse decision in
legal or regulatory proceedings, deterioration in the performance of
individual businesses or of the Company's market value relative to its
book value, resulting in impairments of fixed assets or intangible
assets or other adverse financial consequences, including tax
consequences related thereto, especially in view of the Company’s recent
market valuation and our ability to successfully integrate Zale
Corporation’s operations and to realize synergies from the transaction.
For a discussion of these 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 2018 Annual Report on Form 10-K filed with the SEC on April 2,
2018 and quarterly reports on Form 10-Q filed with the SEC. Signet
undertakes no obligation to update or revise any forward-looking
statements to reflect subsequent events or circumstances, except as
required by law.
View source version on businesswire.com: https://www.businesswire.com/news/home/20180702005295/en/
Source: Signet Jewelers Limited