(Bloomberg) -- The owner of Kay Jewelers and Zales is launching an advanced buyback of shares held by a major investor, which will let the jewelry conglomerate reduce its debt and boost its outlook for earnings per share. 

Signet Holdings Ltd. will pay around $414 million in cash to repurchase half of the convertible preferred shares from investor Leonard Green & Partners, a Los Angeles-based private equity firm that invested in the jeweler in 2016. The shares would have converted to common in November. The company will pay for the transaction using cash, Signet said in a statement Wednesday.

“Our financial strength allows us to take care of it with our cash on hand,” Signet Chief Executive Officer Gina Drosos said in an interview. “With this repurchase, we’re creating even more flexibility to invest and return cash to shareholders.”

The company also amended the terms applicable to the remaining preferred shares, the value of which Signet can now deliver at its discretion in cash, shares or a combination thereof. Under the previous terms, settlement had to be in cash. 

The buyback and amendment will reduce Signet’s share count, leading the company to increase its earnings outlook for the current fiscal year by 9% to 10% to a range of $9.90 to $11.52 a share. Also, the transaction will lower Signet’s debt ratio by 10% from where it stood at the end of the most recent fiscal year.

Evercore advised Signet on the transactions.

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