Item 1.01 Entry into a Material Definitive Agreement.
Securitization of Receivables
On January 26, 2024, affiliates of Conn's, Inc. (the "Company") completed a securitization transaction (the "Securitization Transaction"), which involved the issuance and sale in a private offering of 7.05% $133,490,000 Asset Backed Fixed Rate Notes, Class A, Series 2024-A, due January 16, 2029 (the "Class A Notes"), 9.80% $98,120,000 Asset Backed Fixed Rate Notes, Class B, Series 2024-A, due January 16, 2029 (the "Class B Notes"), and 10.34% $27,760,000 Asset Backed Fixed Rate Notes, Class C, Series 2024-A, due January 16, 2029 (the "Class C Notes" and, together with the Class A Notes and the Class B Notes, the "Purchased Notes"), and the issuance of Asset Backed Notes, Class R, Series 2024-A (the "Class R Notes" and, collectively with the Purchased Notes, the "Series 2024-A Notes"). The Series 2024-A Notes were issued by Conn's Receivables Funding 2024-A, LLC, a newly formed special purpose entity that is indirectly owned by the Company (the "Issuer"). The Series 2024-A Notes are secured by a portfolio of approximately $353,603,585.33 of customer receivables sold and contributed from the Company's loan portfolio indirectly to Conn's Receivables 2024-A Trust (the "Receivables Trust"), a newly formed Delaware statutory trust. Net proceeds from the offering (after deducting the underwriting discount payable to the Initial Purchasers) were $252,555,181.23 and will be used to repay indebtedness under the Company's asset-based credit facility and for other general corporate purposes.
Fitch Ratings, Inc. ("Fitch") has rated the Class A Notes, the Class B Notes and the Class C Notes as follows: the Class A Notes, "BBBsf" by Fitch; the Class B Notes, "BBsf" by Fitch and the Class C Notes, "B+sf" by Fitch. The Class R Notes are currently being retained by an affiliate of the Company but some or all may be sold in the future.
To execute the Securitization Transaction, Conn Credit I, LP, a wholly owned subsidiary of the Company (the "Seller"), sold or conveyed certain customer receivable contracts (the "Contracts") (loans made to finance customer purchases of merchandise from the Company's subsidiaries) to Conn Appliances Receivables Funding, LLC, an indirect wholly owned subsidiary of the Company (the "Depositor"), pursuant to a First Receivables Purchase Agreement, dated as of January 26, 2024, by and between the Seller and the Depositor (the "First Purchase Agreement"). The Depositor then contributed the Contracts to the Receivables Trust pursuant to a Second Receivables Purchase Agreement, dated as of January 26, 2024, by and between the Depositor and the Receivables Trust (the "Second Purchase Agreement"). The Receivables Trust issued a certificate to the Depositor representing a 100% interest in the Receivables Trust (the "Receivables Trust Certificate") and the Receivables Trust Certificate was sold by the Depositor to the Issuer pursuant to a Purchase and Sale Agreement, dated January 26, 2024, by and between the Depositor and the Issuer (the "Purchase and Sale Agreement"). The rights of the Issuer to and under the Receivables Trust Certificate were pledged to Computershare Trust Company, National Association, as trustee (the "Trustee"), for the benefit of the holders of the Series 2024-A Notes and any other person to whom certain obligations of the Issuer are payable. Conn Appliances, Inc., a direct and wholly owned subsidiary of the Company ("Conn Appliances"), is responsible for servicing the receivables transferred to the Receivables Trust as described in more detail below.
The Series 2024-A Notes were issued by the Issuer pursuant to a Base Indenture, dated January 26, 2024, by and between the Issuer and the Trustee (the "Base Indenture"), and a Series 2024-A Supplement to the Base Indenture, dated as of January 26, 2024, by and between the Issuer and the Trustee (the "Supplemental Indenture" and, together with the Base Indenture, the "Indenture"). The Series 2024-A Notes mature on January 16, 2029.
The Purchased Notes were sold initially to MUFG Securities Americas Inc., Deutsche Bank Securities Inc., J.P. Morgan Securities LLC and Regions Securities LLC (collectively, the "Initial Purchasers") and then reoffered and resold only (i) to "Qualified Institutional Buyers" as defined in Rule 144A ("Rule 144A") under the Securities Act of 1933, as amended (the "Securities Act") in transactions meeting the requirements of Rule 144A or (2) solely with respect to the Class A Notes, outside the United States to non-U.S. Persons in transactions in compliance with Regulation S under the Securities Act.
Payments on the Class R Notes are subordinate to all payments of principal and interest on the Class A Notes, the Class B Notes and the Class C Notes and all payments to Conn Appliances, as servicer (the "Servicer"), all third party service providers and the reserve account. Credit enhancement will be provided by excess cashflow, overcollateralization, a reserve account and in the case of the Class A Notes, subordination of the Class B Notes and the Class C Notes, and, in the case of the Class B Notes, subordination of the Class C Notes.
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Conn's Inc. published this content on 31 January 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 31 January 2024 17:26:29 UTC.