Monday, specialty retailer Charming Shoppes, Inc. (CHRS) announced that it has completed the sale of its credit card receivables programs to Alliance Data Systems, Corp. (ADS) with gross proceeds of $166 million. Charming Shoppes said it has also entered into a 10-year operating agreement with Alliance Data for servicing the programs, which are to be used for its Lane Bryant, Fashion Bug and Catherines brands.
Of the $166 million gross proceeds, approximately $30 million has been utilized to terminate contractual obligations related to the credit card receivables programs and exit costs.
Charming Shoppes received net cash proceeds of approximately $136 million related to the transaction which consists of the sale of its private label credit card portfolio, certain other assets and liabilities supporting the card programs, and monetization of Charming Shoppes' consolidated balance sheet asset "Investment in Asset-Backed Securities."
Previously, Charming Shoppes' Investment in Asset-Backed Securities was held on its consolidated balance sheet and its off-balance sheet securitization funding facilities were held in the Charming Shoppes Master Trust. Alliance Data has assumed the operation of this trust and all funding responsibility for the credit card program.
Alliance Data will provide private label credit card services, including account acquisition, activation, card authorization, private label credit card issuance, statement generation, remittance processing, customer service functions, marketing services and receivables funding. To ensure continuity, Alliance Data will maintain and operate Charming Shoppes' existing Milford, Ohio facility, while Charming Shoppes continues management of its credit marketing strategy for its retail brands.
BofA Merrill Lynch and Barclays Capital served as financial advisors to Charming Shoppes on the transaction.
Additionally, Charming Shoppes announced that it has strengthened its global sourcing team with four brand sourcing executives - Roland Medrano, Larry Burak, Donna Perri and John Gambino.
Roland Medrano has been appointed senior vice president, sourcing, Lane Bryant. Roland earlier worked with Gear for Sports as senior vice president of supply chain. Larry Burak, former senior vice president and COO of Warnaco Swimwear Group, has been named senior vice president, sourcing, Fashion Bug. Donna Perri, former vice president, global sourcing, Talbots, has joined Catherines as vice president, sourcing, while John Gambino, former global sourcing and product development director of Liz Claiborne, has joined as vice president, sourcing, Lane Bryant Outlet.
CHRS is currently trading at $4.55, up $0.02, on the Nasdaq, while ADS is trading at $55.49, up $0.49, on the NYSE.
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