Slaughter and May is advising NewDay Cards Ltd and its affiliates (“NewDay”) on the acquisition from Home Retail Group Card Services Ltd (“AFS”), a subsidiary of J Sainsbury plc, of the existing Argos-branded store card portfolio (the “AFS Portfolio”) and associated financing arrangements. The AFS Portfolio comprises approximately two million customers and £800m of receivables.
Closing of the transaction will occur in two stages. NewDay will first acquire beneficial title to the AFS portfolio subject to NewDay obtaining appropriate financing and certain antitrust approvals. This is expected to occur in Q1 2025 (“First Closing”). NewDay will acquire legal title to the AFS portfolio and take responsibility for servicing at migration, which is currently expected to occur in Q1 2026.
NewDay has also reached an agreement with Argos Ltd to create a new Argos-branded digital credit proposition. This will, in time, replace the current Argos card credit and store card propositions with a modern and flexible way for Argos customers to manage the cost of their purchases.
The purchase price for the portfolio acquisition is equal to 90% of the face value of the receivables in the AFS Portfolio at First Closing (subject to adjustments to reflect credit balances and accrued but unbilled interest). This is broadly in line with the estimated net value of loan balances and associated provisions at First Closing and is estimated to represent a purchase price of approximately £720 million.
The transaction will accelerate the growth of NewDay’s credit business by adding approximately two million customers and £800m of receivables. The transaction will be financed through a combination of (i) ABS financing in line with NewDay’s existing securitisation arrangements, (ii) a vendor loan note of up to £60m and (iii) retained cash.
Excluding the requisite IFRS9 provision which will be recognised at First Closing and unwind over time, NewDay anticipates the portfolio being accretive to NewDay’s earnings and cash generation from First Closing.
Slaughter and May is working closely with NewDay’s in-house legal team, led by Stuart Whitty-Lewis, Anthony Hartley and Kate Osborn.
