Signet Jewelers Ltd (NYSE:SIG) shares are trading higher today in the premarket session.
The company and Leonard Green & Partners, L.P., an equity investment firm, today announced the amendment of the terms of the Series A Convertible Preference Shares to net share settlement and the repurchase of half of the Preferred Shares.
“LGP has been a strong supporter of Signet through our transformation journey from the time of our agreement in 2016 and throughout the execution of our Path to Brilliance strategy. Since launching this strategy, Signet has grown revenue double digits while optimizing our fleet, increased gross margins by more than 400 basis points, drove a nearly 60% increase to our non-GAAP diluted earnings per share, and returned more than $1.5 billion to shareholders while investing for future competitive advantage,” said Virginia C. Drosos, Signet’s Chief Executive Officer.
The referred shares, scheduled to mature in November 2024, were convertible into approximately 8.2 million Signet common shares.
Signet will repurchase half of the Preferred Shares for approximately $414 million in cash,and after the transaction there will be $328 million remaining in stated value of the preferred shares which carry a dividend of 5.0%.
The transaction will immediately reduce Signet’s diluted share count by approximately 4.1 million shares, or 7.6% of Signet’s diluted share count.
Signet will settle the transaction from the $1.4 billion in cash on hand at the end of Fiscal 2024.
As a result of the above, Signet increased its FY25 adjusted EPS outlook to $9.90 – $11.52 from $9.08 – $10.48 versus an estimate of $9.72.
This revised range reflects the diluted share impact of the repurchase and amendment with a weighted average diluted share count of approximately 46.3 million shares for Fiscal 2025 and excludes the deemed dividend to net income available to common shareholders of $83 million.
Price Action: SIG shares are trading higher by 3.28% at $98.19 in premarket on the last check Wednesday.
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