Famous departmental store operator Federated Department Stores Inc (FDS) announced that it has completed the first of three transactions related to its previously announced sale of Federated and May Department Stores Company credit card receivables to Citigroup.
Today's initial closing, which includes Federated's owned proprietary credit and Visa receivables, yielded after-tax proceeds of approximately $2.7 billion after eliminating approximately $1.2 billion of outstanding receivables-backed debt. These proceeds will be used to repay debt associated with Federated's acquisition of May Company, which was completed on Aug. 30.
Under the terms of an agreement announced in June 2005, Citigroup will purchase all Federated and May Company credit receivables in three separate transactions at a premium of approximately 11.5 percent. In total, these transactions are expected to produce after-tax proceeds of approximately $4.9 billion.
In the second transaction expected to be completed on May 1, 2006, Federated will transfer to Citigroup a Federated receivables portfolio it will repurchase from General Electric Capital Corporation (GECC). The GECC portfolio included about $1.2 billion in receivables at the end of Federated's fiscal 2004.
In the third transaction, Federated will sell to Citigroup the May Company credit portfolio, which included approximately $1.8 billion in receivables at July 31, 2005. This transaction is expected to occur priorto Aug. 30, 2006.
marketing@alchempro.com
