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Conn’s to repay $563.9 million revolver debt via securitization payout
By Susanna Moon
Chicago, Sept. 9 – Conn’s, Inc. said it will repay the $563.9 million of debt outstanding under its revolving credit facility using proceeds of a securitization transaction.
The paydown is part of the company’s strategic initiatives, which include the appointment of a new chief executive officer, entering into an agreement to securitize $1.4 billion of retail installment contract receivables and termination of the stockholders’ rights plan, according to a company press release.
The securitization will yield upfront proceeds of about $1.08 billion, the release noted.
As of July 31, there was $563.9 million of debt outstanding under the revolver, including standby letters of credit issued, with remaining borrowing capacity of $315 million, the company said.
The company’s board of directors also approved buying back up to $75 million of its 7¼% senior notes due 2022 or its outstanding common shares.
The approved amount is the maximum permitted under the company’s credit facility and senior notes indenture.
The securitization transaction excludes the sale of the residual equity in the securitization portfolio. Conn’s said it is selling the residual equity of the securitized portfolio but may elect to retain all or some of the residual equity in the securitized portfolio if it is in its best economic interest. Conn’s said it intends to execute periodic securitizations of future originated loans, including the sale of any remaining residual equity.
“This approach creates a diversified capital structure that provides the company with access to multiple debt markets by maintaining its existing asset-based revolving credit facility and its outstanding senior notes,” the company said.
The Woodlands, Texas-based company is a specialty retailer of furniture, mattresses, home appliances and consumer electronics and a provider of consumer credit.
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