Signet Finalises Outsourcing of Credit Structure in $446 Million Deal

Finance and Trade
03/07/2018 14:41

Signet Jewelers yesterday announced the completion of the final phase of its strategic outsourcing of credit through the sale of its existing non-prime receivables, for which the group received $445.5 million in cash proceeds. 

With the closing of this transaction, the company explains, 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."

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, the companies have committed to purchasing an equivalent amount of any future receivables for the next five years. Signet says it expects to use the proceeds, along with cash on hand, to repurchase $475 million in shares in Fiscal 2019, of which $60 million was repurchased in the first quarter of Fiscal 2019. Last October, Alliance Data Systems Corp. (ADS), a provider of data-driven marketing and loyalty solutions, acquired prime-only credit quality accounts with a value of approximately $1 billion in receivables from Signet Jewelers.