Federated completes initial phase of card sale

CINCINNATI -- Federated Department Stores has completed the first of three transactions related to its sale of Federated and May Department Stores Company credit card receivables to Citigroup.

Today's initial closing, which includes Federated's owned proprietary credit and Visa receivables, yielded after-tax proceeds of approximately $2.7 billion after eliminating $1.2 billion of outstanding receivables-backed debt. That sum will be used to repay some of the debt from Federated's acquisition of May Company this past August.

Under the terms of an agreement announced in June, Citigroup will purchase all Federated and May Company credit receivables in three separate transactions at a premium of approximately 11.5 percent. In total, these transactions are expected to generate after-tax proceeds of approximately $4.9 billion.

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