Signet Jewelers Ltd., the world’s largest specialty retail jeweler, said Monday that it has amended the terms of some its borrowing agreements in exchange for paying a higher interest rate.
“Discussions to make amendments to, and reduce the size of, the Group’s borrowing facilities were initiated by Signet in November 2008, in light of a significant deterioration in the economic environment,” the company said in a statement. “The goal of the discussions was to provide the Group with additional financial flexibility in the medium term, while more appropriately structuring the borrowing facilities required by the significantly lower level of net debt now expected, based on the Group’s revised operating and expansion strategies.”
Signet has agreed to prepay $100 million of its $380 million note agreement and reduced its five-year revolving credit facility to $370 million from $520 million.
Signet said it anticipates that it will be in compliance with the terms of the original borrowing agreement when it announces its fiscal-year results on March 25, 2009.
“The amended borrowing agreements give Signet greater long-term security in its financing and the reduction in facility size more closely matches the future financing requirements of the Group,” said Walker Boyd, Signet finance director. “The conclusion of these negotiations reflects the strong working relationship that Signet has with our lenders and we appreciate their support of the Group in the current difficult economic environment.”