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Hudson's Bay Company Completes Acquisition of GALERIA Holding
HBS Global Properties Acquires 41
With Acquisition, HBC Grows to between
Adjusted EBITDAR Guidance of
Adjusted EBITDA Guidance of
With the Acquisition, HBC has an international retail platform with over 460 locations across 8 leading banners in 4 countries, and operates the leading department store banners in
"This is a very exciting day in our 345 year history," stated
The Acquisition was financed by the proceeds from HBS Global Properties' acquisition of 41 GALERIA properties.
Concurrently with the Acquisition,
- A €1,338 million (
C$2,007 million) 10 year Real Estate Loan with a fixed interest rate of approximately 2.9%,secured by the GALERIA properties; US$179 million( C$232 million) in cash equity from Simon Property Group, as part of their total commitment of US$279 millionto the joint venture; US$246 million( C$320 million) in cash currently held at HBS Global Properties(excess proceeds from the US CMBS Loan transaction); and US$1,061 million( C$1,379 million) in equity re-invested by HBC, of which between US$400to US$600 millionis expected to be sold to third parties, the proceeds of which will be used to reduce outstanding borrowings at HBC.
HBC's equity investment in
Following the conclusion of these transactions, HBC retains a 92% ownership stake in
HBC was able to close the Acquisition at the earliest possible date, and is in advanced discussions with multiple qualified institutional investors that have expressed interest in investing in
Financial Guidance for Fiscal 2015 and 2016
Looking forward, the Company expects Sales, Adjusted EBITDAR, and Adjusted EBITDA for fiscal 2015 and 2016 to increase significantly based on initiatives including:
- The addition of GALERIA;
- Benefits of the North American cost realignment program announced on
September 29, 2015;
- Continuing strategic investments in HBC's digital business;
- The opening of new stores in
North America, which includes the introduction of Saksand Saks OFF 5TH to Canada; and
- Continued improvement and ongoing growth of our North American operations.
Based on these factors, among others, management has provided the below guidance for fiscal 2015 and 2016. This guidance is fully qualified by the "Forward-Looking Statements" section of this press release.
|Canadian Dollars||Fiscal 2015||Fiscal 2016|
Assumes the following: €1 =
This sales forecast implies low single digit same store sales growth, calculated on a constant currency basis. Adjusted EBITDA guidance assumes the contribution of the Yorkdale,
The closing of the Acquisition represents a major step in HBC's journey to become a global world class retailer. The addition of GALERIA's banners across two countries in
HBC Financial Community Conference Call to Discuss Transaction
HBC's management team will discuss the transaction during a conference call for the financial community today,
Presentation slides for the conference call will be made available on the Company's website located at www.hbc.com.
HBC has significant investments in real estate joint ventures. It has partnered with Simon Property Group Inc. in HBS Global Properties Joint Venture, which owns properties in
Certain statements made in this news release, including, but not limited to, the benefits that are expected to result from the acquisition of GALERIA, growth opportunities for GALERIA as a result of contemplated strategic initiatives, the Company's prospects for future European growth opportunities, the Company's growth strategies of improving successful retail operations, unlocking the value of real estate and growing through acquisitions, HBC's expectations with respect to selling equity at
Implicit in forward-looking statements in respect of Sales, Adjusted EBITDAR and Adjusted EBITDA for fiscal 2015 and 2016, are certain current assumptions, including, among others, the Company achieving low single digit same store sales growth on a constant currency basis in each of fiscal 2015 and 2016, the Company realizing annualized cost savings and synergies during fiscal year 2016 totaling
Although HBC believes that the forward-looking statements in this news release are based on information and assumptions that are current, reasonable and complete, these statements are by their nature subject to a number of factors that could cause actual results to differ materially from management's expectations and plans as set forth in such forward-looking statements for a variety of reasons. Some of the factors - many of which are beyond HBC's control and the effects of which can be difficult to predict - include, among others: (a) the risk that the anticipated benefits and growth opportunities from the GALERIA acquisition cannot be realized; (b) the ability of HBC to retain and attract key GALERIA personnel and for GALERIA to maintain relationships with customers, suppliers and other business partners; (c) the risk that third parties will not enter into definitive agreements to invest in equity at
HBC cautions that the foregoing list of important factors and assumptions is not exhaustive and other factors could also adversely affect its results. For more information on the risks, uncertainties and assumptions that could cause HBC's actual results to differ from current expectations, please refer to the "Risk Factors" section of HBC's Annual Information Form dated
The forward-looking statements contained in this news release describe HBC's expectations at the date of this news release and, accordingly, are subject to change after such date. Except as may be required by applicable Canadian securities laws, HBC does not undertake any obligation to update or revise any forward-looking statements contained in this news release, whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on these forward-looking statements.
Unless otherwise indicated, all "$" dollar amounts are expressed in Canadian dollars, and other than in respect of fiscal 2016 Financial Guidance, the following exchange rates are assumed: €1 =
EBITDA is a non-IFRS measure that we use to assess our operating performance. EBITDA is defined as net earnings (loss) before finance costs, income tax, share of net earnings (loss) in joint ventures, the gain on contribution of assets to joint ventures, the gain on the
Adjusted EBITDAR is defined as EBITDAR adjusted to exclude: (i) business and organization restructuring/realignment charges; (ii) merger/acquisition costs and expenses; and (iii) normalizing adjustments, if any, related to transactions that are not associated with day-to-day operations. Adjusted EBITDA is defined as Adjusted EBITDAR less rent to third-parties, less cash rent to the real estate joint ventures plus cash distributions from the real estate joint ventures.
We have included EBITDA, EBITDAR, Adjusted EBITDAR and Adjusted EBITDA, to provide investors and others with supplemental measures of our operating performance. We believe EBITDA, EBITDAR, Adjusted EBITDAR and Adjusted EBITDA are important supplemental measures of operating performance because they eliminate items that have less bearing on our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS financial measures. We also believe that securities analysts, investors, rating agencies and other interested parties frequently use EBITDA, EBITDAR, Adjusted EBITDAR and Adjusted EBITDA in the evaluation of issuers, many of which present similar metrics when reporting their results. Our management also uses Adjusted EBITDA in order to facilitate operating performance comparisons from period to period, prepare annual operating budgets and assess our ability to meet our future debt service, capital expenditure and working capital requirements and our ability to pay dividends on our shares. As other companies may calculate EBITDA, EBITDAR, Adjusted EBITDAR and Adjusted EBITDA differently than we do, these metrics are not comparable to similarly titled measures reported by other companies.
This press release makes reference to certain financial results expressed on a constant currency basis, including anticipated same stores sales growth. In calculating the same store sales change on a constant currency basis, prior year foreign exchange rates are applied to both current year and prior year same store sales. This enhances the ability to compare underlying sales trends by excluding the impact of foreign currency exchange rate fluctuations. Definitions and calculations of same store sales differ among companies in the retail industry.
Note: All quoted values other than 2016 Fiscal Guidance assume that € 1 =
(1) Based on management's estimate, see "Financial Guidance for Fiscal 2015 and 2016", "Forward-Looking Statements" and "Non-IFRS Measures".
(2) For a reconciliation of Adjusted EBITDAR and Adjusted EBITDA to net income for fiscal 2014, please see the presentation slides regarding the Acquisition dated the date hereof, which will be available on the Company's website at www.hbc.com
(3) Enterprise value includes finance leases and €69 million minority interest to be acquired in the next several months, and excludes €324 million of pension liabilities that will be assumed by HBC as part of the Acquisition.
(4) Represents value of properties after all transactions are completed, including the post-closing acquisition of certain real estate properties and the minority interest, expected to occur within 6 months.
(5) Interest rate has a LIBOR floor of 1%.
(6) Based on Canadian dollar property values of
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