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RAPAPORT... With a five-year revolving credit facility of $550 million from GE Corporate Lending, Finlay Fine Jewelry Corporation completed its purchase of Bailey Banks & Biddle retail chain from the Zale Corporation for $200 million. GE Capital Markets Inc. is acting as sole bookrunner for the financing. A post closing inventory adjustment of approximately $25 million will also be financed through the new revolving credit facility.
The purchase gives Finlay its third stand alone jewelry brand after having acquired Carlyle and Congress jewelers in two separate purchases during 2005 and again in 2006. Bailey Banks & Biddle operates a chain of 70 stand-alone retail stores in 24 states with a focus on the luxury markets.
The acquired assets are expected to generate sales of between $280 million to $300 million for Finlay's fiscal year ending January 31, 2009, which will be the first full year of operation following the completion of the transaction.
After taking into account certain synergies of the transaction, Finlay expects the acquisition to be accretive to fiscal 2008 earnings in excess of 20-cents per diluted share, based upon estimated EBITDA in the range of $23 million to $27 million.
Arthur E. Reiner, Finlay chairman and CEO, said that the purchase represents a significant milestone and a major step forward in diversifying the business through acquisitions. "The transaction nearly triples the number of stand-alone jewelry stores that we operate and significantly expands our presence in the luxury market, which continues to be one of the most attractive segments of the jewelry business."
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