Item 1.01 Entry into a Material Definitive Agreement
Stock Purchase Agreement
On August 5, 2022, Sterling Jewelers Inc. (“Sterling”), a Delaware corporation and a wholly-owned subsidiary of Signet Jewelers Limited, a Bermuda corporation (the “Company”), entered into a Stock Purchase Agreement (the “Agreement”) with BC Cyan Investment Holdings Inc., a Delaware corporation (“Blue Nile”), and BC Cyan Holdings LP, a Delaware limited partnership (“Seller”). All capitalized terms included in this Current Report on Form 8-K not otherwise defined herein have the meanings set forth in the Agreement.
The Agreement provides, among other things, that 1) at the Closing, Sterling will purchase from Seller all of the issued and outstanding shares of capital stock of Blue Nile (the "Capital Stock"), other than the Series C Preferred Stock, 2) concurrently with the Closing, Blue Nile will redeem all of the shares of Series C Preferred Stock held by the Series C Holders and all outstanding Options will terminate in accordance with the terms of the Option Plan, and 3) immediately following the Closing, Sterling will hold 100% of the equity interests of Blue Nile, on a cash-free and debt-free basis. The Agreement contains customary representations and warranties and other provisions applicable in transactions of this nature, and also contemplates an escrow agreement that will provide for the establishment of an escrow account, with the cash in such account to be the sole recourse for a post-Closing purchase price adjustment.
Consideration
Subject to the terms and conditions set forth in the Agreement, at the Closing, the parties will consummate the following transactions: (a) Purchaser will repay, or cause to be repaid, on behalf of Blue Nile or Seller, all amounts of Funded Indebtedness as set forth in the Estimated Closing Statement and applicable Payoff Letters; (b) Purchaser will deposit, or cause to be deposited, the Adjustment Escrow Amount in the Adjustment Escrow Account; (c) Purchaser will pay, or cause to be paid, on behalf of Blue Nile, the Series C Redemption Price to the Series C Holders as set forth in the Estimated Closing Statement; (d) Purchaser will pay, or cause to be paid, to Seller the Closing Cash Proceeds as set forth in the Estimated Closing Statement; (e) Purchaser will pay, or cause to be paid, on behalf of Blue Nile or Seller, all Estimated Transaction Expenses to each Person who is owed a portion thereof as set forth in the Estimated Closing Statement; and (f) Purchaser, Blue Nile and Seller will make such other deliveries required by the Agreement.
The Closing Cash Proceeds for the transaction is $360 million payable in cash, subject to customary adjustments (including for Cash, Indebtedness, Transaction Expenses and Net Working Capital, as well as to take into account the Adjustment Escrow Amount and the Series C Redemption Price) both at and following the Closing as further provided in the Agreement.
Conditions to the Closing, Representations and Warranties and Covenants
The parties’ obligation to consummate the transactions contemplated by the Agreement is subject to the satisfaction or waiver of customary closing conditions.
Sterling, Blue Nile and Seller have made customary representations and warranties in the Agreement. The Agreement also contains customary covenants and agreements, including pre-closing covenants regarding the conduct of Blue Nile’s and its Subsidiaries’ business between the execution of the Agreement through the Closing Date or earlier termination of the Agreement. In addition, the Agreement provides that, during the period from the date of the Agreement through the Closing Date or earlier termination of the Agreement, Blue Nile and Seller will not, and will cause the their Affiliates, directors, partners, officers, managers, employees, agents or Advisors not to, take any action or otherwise solicit, encourage, initiate, entertain, consider, or accept any acquisition proposal or otherwise engage in discussions with any potential acquirer (other than Sterling and its Affiliates and Advisors).
Termination Rights
The Agreement contains certain termination rights for both Sterling and Seller. Sterling or Seller may terminate the Agreement, subject to certain exceptions, if the Closing has not occurred on or before November 3, 2022.
The foregoing summary of the Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Agreement, which is incorporated herein by reference and will be filed with the Company’s next quarterly report on Form 10-Q.