8-KMaterial Agreements

TARGET CORP 8-K Report, Agreement Terminated (Jan 26, 2012)

Filed January 26, 2012For Securities:TGT

Summary

This 8-K filing by Target Corporation (TGT) on January 26, 2012, details the termination of a significant material definitive agreement related to its credit card receivables. Specifically, TCC Corporation S.à r.l., a wholly owned subsidiary of Target, purchased and subsequently cancelled a Floating Rate Asset-Backed Note (the "Note") issued by the Target Credit Card Owner Trust 2008-1. The purchase price for the Note was approximately $2.77 billion, plus an $85 million make-whole premium. The termination of this Note and associated agreements, including the Note Purchase Agreement and the Indenture, signifies a restructuring or conclusion of a prior securitization arrangement involving Target's credit card receivables. This action effectively removes a layer of financial complexity related to these receivables from Target's balance sheet and operations.

Key Highlights

  • 1Target's subsidiary, TCC Corporation S.à r.l., purchased a Floating Rate Asset-Backed Note (the "Note") for approximately $2.77 billion.
  • 2A make-whole premium of approximately $85 million was paid in connection with the Note purchase.
  • 3The purchased Note was subsequently cancelled, terminating the associated Trust (Target Credit Card Owner Trust 2008-1).
  • 4This action terminates the Note Purchase Agreement dated May 5, 2008, and the Indenture dated May 19, 2008.
  • 5The Note was originally issued in a 2008 transaction involving the sale of an undivided interest in Target's credit card receivables.
  • 6The termination effectively unwinds a securitization structure related to Target's credit card receivables.
  • 7This move may simplify Target's financial structure and reduce off-balance sheet exposures related to credit card assets.

Frequently Asked Questions

The primary reason was to terminate a material definitive agreement related to Target's credit card receivables. By purchasing and cancelling the Note, Target, through its subsidiary, effectively unwound a prior securitization structure, simplifying its financial arrangements and potentially removing liabilities associated with these receivables.

The immediate financial impact involves the cash outflow of approximately $2.855 billion ($2.77 billion purchase price + $85 million make-whole premium). However, it simplifies Target's balance sheet by terminating the associated agreements and potentially reduces future servicing or financial obligations related to the securitized credit card receivables.

This filing specifically addresses the termination of a past securitization agreement from 2008. It does not necessarily indicate Target's exit from the credit card business itself, but rather a restructuring or termination of how those receivables were financed through securitization.

JPMN II Inc. (f/k/a BOTAC, Inc.) was the seller of the Note to Target's subsidiary. Chase Bank USA, National Association (Chase) is an affiliate of JPMN. JPMorgan Chase Bank, N.A., an affiliate of both, has provided and may continue to provide commercial and investment banking services to Target.