Signet Announces Closing of $625 Million Leonard Green Strategic Investment

(IDEX Online) – Signet Jewelers Limited, the world's largest retailer of diamond jewelry, announced that it has closed a previously announced transaction with Leonard Green & Partners, L.P., a leading private equity firm.

Affiliates of LGP invested $625 million in the form of convertible preferred shares. In connection with the closing of the transaction, Jonathan Sokoloff, Managing Partner of LGP, was added to the Signet board of directors.

Mark Light, Chief Executive Officer of Signet Jewelers said, “We are pleased to welcome Leonard Green as a long-term strategic investor who will provide a strong foundation to our shareholder base and bring added retail and financial expertise to our board of directors. We view Leonard Green’s significant investment in Signet as a strong vote of confidence in our business and our long-term growth prospects, and we look forward to working together to further grow and shape the Signet portfolio of brands.”

The investment in Signet by certain funds affiliated with LGP is in the form of convertible preferred shares that accrue a 5% p.a. dividend, payable quarterly in arrears, in cash or by increasing the stated value, at the option of Signet. The preference shares are convertible into 6.7 million Signet common shares based on a conversion price of $93.8712. This represents a premium of 18% to the volume weighted average price of the common shares for the 20 trading days following Signet’s second quarter earnings announcement on August 25, 2016. LGP will be subject to a two-year lock-up period (subject to certain exemptions) and Signet will also have the right to force conversion after two years if the volume weighted average price of Signet common shares is greater than $164.2746 for 20 consecutive trading days.

The Signet board, as previously disclosed, increased its authorized share buyback program by $625 million on August 25. In connection with today’s transaction, Signet has entered into an accelerated share repurchase (ASR) agreement with J.P. Morgan Securities LLC, as agent for JPMorgan Chase Bank, National Association, London Branch (JPMorgan) in order to offset the convertible preferred share dilution.

Key features of the ASR, which will be funded by the proceeds of the preferred share issuance, are as follows:

• Signet will repurchase its common shares at an aggregate purchase price of $525 million.

• The total number of common shares to be purchased ultimately by Signet under the ASR will generally be based on the average of the daily volume-weighted average prices of Signet’s common shares during the term of the ASR minus a discount.

• Signet may receive, or be required to pay, a future price adjustment upon final settlement of the ASR. The price adjustment may be settled in cash or Signet’s common shares.

• The ASR is expected to be completed over approximately three months.

The balance of the authorized share repurchases, representing an amount of $100 million, were made by the company on the open market at various points prior to transaction close to offset dilution. Signet’s share repurchase activity is expected to result in an EPS-neutral financial transaction.

Advisory and consulting fees incurred in connection with the preferred securities were approximately $13 million.