SAN FRANCISCO (Thomson Financial) - Target Corp. late Monday said it has
agreed to sell an undivided interest in its credit card receivables to JPMorgan
Chase & Co. for about $3.6 billion in cash.
The interest would represent about 47% of the principal amount of Target's
outstanding receivables at that time, the Minneapolis-based discount retailer
said.
The agreement is expected to provide Target with sufficient liquidity to
implement its business plans, including previously announced capital investment
and share buybacks, without the need to access term debt capital markets again
this year, the company said.
Expectations for full-year 2008 growth in both accounts receivable and
credit card profits remain consistent with prior guidance, Target said. In the
near term, the company said it expects "substantial" year-over-year receivables
growth as a result of the sequential growth that occurred in the second and
third quarters of 2007.
Additionally, the beneficial impact from recent terms changes are expected
to fully offset the adverse impact of slightly poorer-than-expected credit card
losses, Target said. The company said it now expects net write-offs as a
percentage of receivables to lie in the range of 7% to 8% for the year, and
delinquencies as a percentage of receivables will remain stable at about 4%.
The deal is expected to close before the end of May.
Target shares closed the regular session down 7 cents, or 1.4%, at $53.14.
Katherine Hunt
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