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
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 SignetSignet 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 InvestorsCarVal 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 CastlelakeCastlelake, 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 HarborThis 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.
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version on businesswire.com: https://www.businesswire.com/news/home/20180702005295/en/
Signet Jewelers LimitedInvestors:Randi Abada, +1
330-668-3489SVP Corporate Finance Strategy & Investor
Relationsrandi.abada@signetjewelers.comorMedia:David
Bouffard, +1 330-668-5369VP Corporate
Affairsdavid.bouffard@signetjewelers.com
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