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Rhône Capital completes $500m investment in retailer HBC

Published 07 December 2017

Diversified global retailer HBC and Rhône Capital have closed a previously announced $500m equity investment by an affiliate of Rhône Capital as part of a global, multi-faceted strategic relationship with Rhône and WeWork Companies.

The net proceeds from the transaction will be used to repay outstanding borrowings on the Company’s asset-based revolving facility, which will reduce interest expense and strengthen HBC’s balance sheet.

HBC issued a total of 50,919,608 series “A” 8-year mandatory convertible preferred shares (“Preferred Shares”) for an aggregate purchase price of U.S.$500 million (C$632 million).

The Preferred Shares are convertible into the Company’s common shares (“Common Shares”) at U.S.$9.82 (C$12.42) per share, which conversion price is subject to adjustment from time to time in accordance with the terms of the Preferred Shares.

In connection with the closing of the transaction, HBC has appointed M. Steven Langman, Managing Director of Rhône, and Eric Gross, Managing Partner of WeWork Property Investors, to the board of directors (the “Board”) of HBC.

HBC also announced the receipt of a deposit in the amount of U.S.$75 million (C$95 million) in connection with the previously announced sale of the Lord & Taylor Fifth Avenue building to an affiliate of WeWork Property Advisors in a transaction valued at U.S.$850 million (C$1.075 billion), subject to customary adjustments. The deposit is non-refundable subject to certain limited exceptions.

It is currently expected that the sale of the Lord & Taylor Fifth Avenue building will close no later than August 10, 2018, subject to the satisfaction of applicable conditions.

HBC also announced today that its Board has approved HBC’s regular quarterly dividend to be paid on January 15, 2018, to shareholders of record at the close of business on December 29, 2017. The dividend is in the amount of $0.0125 per Common Share and is designated as an “eligible dividend” for Canadian tax purposes. The declaration of dividends is at the discretion of HBC’s Board.

Source: Company Press Release