Signet Jewelers announced Oct. 28 that it intends to prepay
the $229.1 million aggregate principal amount of private placement notes
outstanding under its 2013-2018 U.S. Private Placement Note Term Series
Agreement dated as of March 30, 2006, as amended.
Signet and its lenders have also amended their $300 million
unsecured multi-currency five-year revolving credit facility agreement dated as
of June 26, 2008, as amended.
Signet yesterday sent notice to the note holders that all of
the notes would be prepaid on Nov. 26. This will result in a reduction in
interest expense of $101.7 million over the remaining term of the notes. The
prepayment requires the payment of all accrued interest up to the prepayment
date, plus a premium as determined by the ‘make whole’ provision contained in
the note agreement. The ‘make whole’ premium will be determined on Nov. 23,
2010, is dependent on medium term U.S. Treasury yields, and is expected to be
about $47 million.
This payment will be reflected in Signet’s results for the
fourth quarter of Fiscal 2011, ending Jan. 29, 2011 and is anticipated to
have a net $0.32 adverse impact on diluted earnings per share.
“There is a clear benefit to shareholders from
prepaying the notes and amending the facility agreement,” said Signet CFO Ron Ristau in a statement. “As a result, we reduce interest expense and further
improve our financial and operating flexibility. These actions again
demonstrate the competitive advantages of our strong balance sheet and
significant cash flow generation.”