MINNEAPOLIS–Target has started negotiations with an unnamed investment partner to sell an interest in about half of the retailer’s credit-card receivables for about $4 billion.
According to a statement from the mass merchant, the action is the result of a review of alternatives for the ownership of those receivables that began last September. While the company added that it couldn’t definitely say if a transaction would occur, “a closing during the second calendar quarter of 2008 seems possible at this time.”
If completed, the transaction is intended to achieve all of the objectives Target outlined in a statement released last Sept. 12, which include generating “substantial liquidity” for Target from a source not related to the debt capital markets. In addition, the deal would ally the retailer with an investment partner “whose broad experience is expected to result in strategic and financial benefits to Target over time.”