Conn's, Inc. Announces Pricing of $559 Million Securitization Transaction
April 13 2017 - 6:00AM
Business Wire
Class A, B and C Notes to Be Issued
Concurrently
Class A Notes Expected to Be Rated BBB by Fitch
Ratings, Inc. (“Fitch”) and by Kroll Bond Rating Agency, Inc.
(“Kroll”)
Conn’s, Inc. (NASDAQ:CONN), today announced that it has
entered into an agreement to securitize an aggregate of $559
million of consumer receivables, with closing expected on or about
April 19, 2017.
The offering includes three classes of fixed rate notes: (i)
$313.2 million aggregate principal amount of the Class A asset
backed notes which are expected to be rated BBB by Fitch and Kroll;
(ii) $106.3 million aggregate principal amount of the Class B asset
backed notes which are expected to be rated BB by Fitch and BB- by
Kroll; and (iii) $50.3 million aggregate principal amount of the
Class C asset backed notes which are expected to be rated B- by
Fitch and Kroll.
The face amount of the Class A, B and C notes to be issued in
the securitization is $469.8 million, with an advance rate of
approximately 84% of the outstanding customer receivables portfolio
balance. Conn’s will receive upfront proceeds with respect to those
notes of approximately $457 million net of transaction costs and
reserves. The coupon rate to investors is 2.73% on the Class A
notes, 5.11% on the Class B notes and 7.40% on the Class C
notes.
The all-in cost of funds of the Class A and B notes only,
including transaction costs, is approximately 5.4% which is a
150-basis point improvement over the 6.9% all-in cost of funds,
including transaction costs, for the Class A and B notes issued in
Conn’s October 2016 securitization transaction. The initial advance
rate for the Class A and B notes in this securitization transaction
is approximately 75%, compared to an initial advance rate of
approximately 72% for the Class A and B notes in the October 2016
securitization transaction.
With the concurrent issuance of the Class C notes in this
transaction, the initial advance rate of approximately 84% is the
highest advance rate achieved in a securitization transaction since
Conn’s re-entered the securitization market in 2012. The all-in
cost of funds of the Class A, B and C notes, including transaction
costs, is approximately 6.2%.
The notes will not be registered under the Securities Act of
1933, as amended (the "Securities Act"), and may not be offered or
sold in the United States absent registration or an applicable
exemption from registration requirements. The notes will be offered
only (i) within the United States to persons who are
qualified institutional buyers as defined in Rule 144A under the
Securities Act of 1933, as amended, and (ii) solely with respect to
the Class A Notes, to certain non-U.S. persons in offshore
transactions in reliance on Regulation S under such Act.
About Conn's, Inc.
Conn's is a specialty retailer currently operating over 110
retail locations in Alabama, Arizona, Colorado, Georgia, Louisiana,
Mississippi, Nevada, New Mexico, North Carolina, Oklahoma, South
Carolina, Tennessee and Texas. The Company's primary product
categories include:
- Furniture and mattress, including
furniture and related accessories for the living room, dining room
and bedroom, as well as both traditional and specialty
mattresses;
- Home appliance, including
refrigerators, freezers, washers, dryers, dishwashers and
ranges;
- Consumer electronics, including LED,
OLED, Ultra HD, and internet-ready televisions, Blu-ray players,
home theater and portable audio equipment; and
- Home office, including computers,
printers and accessories.
Additionally, Conn's offers a variety of products on a seasonal
basis. Unlike many of its competitors, Conn's provides flexible
in-house credit options for its customers in addition to
third-party financing programs and third-party lease-to-own payment
plans.
This press release contains forward-looking statements within
the meaning of the federal securities laws, including but not
limited to, the Private Securities Litigation Reform Act of 1995
that involve risks and uncertainties. Such forward-looking
statements include information concerning the Company's future
financial performance, business strategy, plans, goals and
objectives. Statements containing the words "anticipate,"
"believe," "could," "estimate," "expect," "intend," "may," "plan,"
"project," "should," or the negative of such terms or other similar
expressions are generally forward-looking in nature and not
historical facts. We can give no assurance that such statements
will prove to be correct, and actual results may differ materially.
A wide variety of potential risks, uncertainties, and other factors
could materially affect the Company's ability to achieve the
results either expressed or implied by the Company's
forward-looking statements including, but not limited to: general
economic conditions impacting the Company's customers or potential
customers; the Company's ability to execute periodic
securitizations of future originated customer loans including the
sale of any remaining residual equity on favorable terms; the
Company's ability to continue existing customer financing programs
or to offer new customer financing programs; changes in the
delinquency status of the Company's credit portfolio; unfavorable
developments in ongoing litigation; increased regulatory oversight;
higher than anticipated net charge-offs in the credit portfolio;
the success of the Company's planned opening of new stores;
technological and market developments and sales trends for the
Company's major product offerings; the Company's ability to protect
against cyber-attacks or data security breaches and to protect the
integrity and security of individually identifiable data of the
Company's customers and employees; the Company's ability to fund
its operations, capital expenditures, debt repayment and expansion
from cash flows from operations, borrowings from the Company's
revolving credit facility, and proceeds from accessing debt or
equity markets; the ability to continue the repurchase program; and
the other risks detailed in the Company's most recent reports filed
with the Securities and Exchange Commission, including but not
limited to, the Company's Annual Report on Form 10-K, the Company's
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. If
one or more of these or other risks or uncertainties materialize
(or the consequences of such a development changes), or should our
underlying assumptions prove incorrect, actual outcomes may vary
materially from those reflected in our forward-looking statements.
You are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this
press release. We disclaim any intention or obligation to update
publicly or revise such statements, whether as a result of new
information, future events or otherwise. All forward-looking
statements attributable to us, or to persons acting on our behalf,
are expressly qualified in their entirety by these cautionary
statements. The Company makes available in the investor relations
section of its website at ir.conns.com updated monthly reports to
the holders of its asset-backed notes. This information reflects
the performance of the securitized portfolio only, in contrast to
the financial statements contained herein, which reflect the
performance of all of the Company's outstanding receivables,
including those originated subsequent to those included in the
securitized portfolio. The website and the information contained on
our website are not incorporated in this or any other document
filed with the SEC.
CONN-G
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version on businesswire.com: http://www.businesswire.com/news/home/20170413005398/en/
S.M. Berger & CompanyAndrew Berger, 216-464-6400
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