AEO Inc. Announces a Series of Actions to Strengthen Capital Structure
03 Juin 2022 - 01:00PM
Business Wire
- Enters Into Exchange Agreements for Outstanding Convertible
Senior Notes due 2025
- Announces $200 Million Accelerated Share Repurchase Program
(ASR)
- Pursuing Upsize and Extension of ABL Facility to Unlock
Additional Liquidity
American Eagle Outfitters Inc. (NYSE: AEO) today announced that
it has entered into exchange agreements with certain holders of its
3.75% Convertible Senior Notes due 2025 in exchange for a
combination of cash and shares of the company’s common stock.
The 2025 Notes to be exchanged represent approximately $342
million of the outstanding principal amount. Following the
exchange, approximately $70 million in aggregate principal amount
will remain outstanding. The exchange transactions are expected to
close on June 8, 2022.
The company has also entered into an accelerated share
repurchase agreement (ASR) with JPMorgan Chase Bank, National
Association to repurchase $200 million of the company’s common
stock. This equates to approximately 16.7 million shares based on
the closing price on June 2, 2022 and represents approximately 8%
of the company’s fully diluted shares outstanding as of that date.
The final number of shares to be repurchased will be based on the
volume-weighted average price of the company’s common stock during
an averaging period. The ASR has been entered into in connection
with AEO’s existing share repurchase authorization of 30 million
shares.
AEO expects to fund the cash portion of the amounts payable
under the exchange agreements and the ASR using available cash on
hand and borrowings under the company’s existing $400 million ABL
facility.
The company is also pursuing an upsize and extension of its ABL
facility to $600 million with a term of 5 years, to unlock
additional liquidity. The company has not yet entered into
definitive documentation, and there is no guarantee that the ABL
credit facility will be amended, or of the terms of any such
amendment.
This press release does not constitute an offer to sell or a
solicitation to buy any of the securities described herein, nor
shall there be any offer, solicitation, or sale of these securities
in any jurisdiction in which such offer, solicitation or sale would
be unlawful.
Advisors
J. Wood Capital Advisors acted as financial advisor and
placement agent to the Company with Wachtell, Lipton, Rosen &
Katz serving as legal counsel.
About American Eagle Outfitters, Inc.
American Eagle Outfitters, Inc. (NYSE: AEO) is a leading global
specialty retailer offering high-quality, on-trend clothing,
accessories and personal care products at affordable prices under
its American Eagle® and Aerie® brands. Our purpose is to show the
world that there’s REAL power in the optimism of youth. The company
operates stores in the United States, Canada, Mexico, and Hong
Kong, and ships to 81 countries worldwide through its websites.
American Eagle and Aerie merchandise also is available at more than
200 international locations operated by licensees in 25 countries.
For more information, please visit www.aeo-inc.com.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995
This release and related statements by management contain
forward-looking statements (as such term is defined in the Private
Securities Litigation Reform Act of 1995), which represent our
expectations or beliefs concerning future events. All
forward-looking statements made by the company involve material
risks and uncertainties and are subject to change based on many
important factors, some of which may be beyond the company’s
control. Words such as "estimate," "project," "plan," "believe,"
"expect," "anticipate," "intend," “potential,” and similar
expressions may identify forward-looking statements. Except as may
be required by applicable law, we undertake no obligation to
publicly update or revise any forward-looking statements whether as
a result of new information, future events or otherwise and even if
experience or future changes make it clear that any projected
results expressed or implied therein will not be realized. The
following factors, in addition to the risks disclosed in Item 1A.,
Risk Factors, of our Annual Report on Form 10-K for the fiscal year
ended January 29, 2022 and in any other filings that we may make
with the Securities and Exchange Commission in some cases have
affected, and in the future could affect, the company's financial
performance and could cause actual results for fiscal 2022 and
beyond to differ materially from those expressed or implied in any
of the forward-looking statements included in this release or
otherwise made by management: the negative impacts of the COVID-19
pandemic and related operational disruptions; the risk that the
company’s operating, financial and capital plans may not be
achieved; our inability to anticipate customer demand and changing
fashion trends and to manage our inventory commensurately;
seasonality of our business; our inability to achieve planned store
financial performance; our inability to react to raw material cost,
labor and energy cost increases; our inability to gain market share
in the face of declining shopping center traffic; our inability to
respond to changes in e-commerce and leverage omni-channel demands;
our inability to expand internationally; difficulty with our
international merchandise sourcing strategies; challenges with
information technology systems, including safeguarding against
security breaches; and global economic, public health, social,
political and financial conditions, and the resulting impact on
consumer confidence and consumer spending, as well as other changes
in consumer discretionary spending habits, which could have a
material adverse effect on our business, results of operations and
liquidity.
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version on businesswire.com: https://www.businesswire.com/news/home/20220602006035/en/
Olivia Messina 412-432-3300 LineMedia@ae.com
American Eagle Outfitters (NYSE:AEO)
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