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Signet Jewelers completes credit outsourcing

The nation’s largest jewelry retailer has completed the last phase of a plan to outsource its credit portfolio, in a deal in which it received $445.5 million from the sale of existing non-prime receivables.

Signet Jewelers Limited, parent company of Kay Jewelers, Zales, Jared The Galleria Of Jewelry and other brands, said it has sold its existing non-prime receivables and implemented a “forward flow purchase arrangement for future non-prime receivables,” with funds managed by CarVal Investors and Castlelake. The closing of the deal means that Signet has transitioned to a fully outsourced credit structure while maintaining a full spectrum of 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,” stated Signet, which operates more than 3,500 stores. “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 received $445.5 million in cash proceeds from the sale of existing non-prime receivables excluding transaction costs, net of a 5% 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.
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