Bread Financial Announces Pricing of Private Offering of $275 Million of New Convertible Senior Notes

Bread Financial Holdings, Inc. (NYSE: BFH) (“Bread Financial” or the “Company”) announced today the pricing of its private offering of $275 million in aggregate principal amount of its 4.25% convertible senior notes due 2028 (the “Convertible Notes”) in a private placement (the “Offering”) to eligible purchasers under Rule 144A of the Securities Act of 1933, as amended (the “Securities Act”). In connection with the Offering, if the initial purchasers sell more than $275 million principal amount of Convertible Notes, the Company has granted the initial purchasers the right to purchase, for settlement within a 13-day period beginning on, and including, the date the Convertible Notes are first issued, up to an additional $41.25 million aggregate principal amount of Convertible Notes. The sale of the Convertible Notes is expected to close on or about June 13, 2023, subject to customary closing conditions, and is expected to result in approximately $265.5 million in net proceeds to the Company, after deducting the initial purchasers’ discount and estimated offering expenses payable by the Company (assuming no exercise of the initial purchasers’ option) but before deducting the cost of the capped call transactions referred to below.

The Company intends to use $34.1 million of the net proceeds from the Offering to fund the cost of entering into the capped call transactions described below and intends to use the remainder of such net proceeds in connection with the refinancing of the Company’s existing credit agreement.

If the initial purchasers exercise their option to purchase additional Convertible Notes, the Company expects to use a portion of the additional net proceeds to fund the cost of entering into additional capped call transactions described below and the remaining net proceeds to further repay in part the outstanding loans under the Company’s existing credit agreement.

The Convertible Notes will be senior, unsecured obligations of the Company, and accrue interest at a rate of 4.25% per annum, payable semi-annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2023. The Convertible Notes will mature on June 15, 2028 unless repurchased, redeemed or converted in accordance with their terms prior to such date.

The initial conversion rate for the Convertible Notes is 26.0247 shares of the Company’s common stock per $1,000 principal amount of Convertible Notes (which is equivalent to an initial conversion price of approximately $38.43 per share, which represents a premium of approximately 25.0% over the last reported sale price per share of the Company’s common stock on June 8, 2023). Prior to the close of business on the business day immediately preceding March 15, 2028, the Convertible Notes will be convertible only upon satisfaction of certain conditions and during certain periods; thereafter, the Convertible Notes will be convertible at any time until the close of business on the second scheduled trading day immediately preceding the maturity date. The Company will settle conversions by paying cash up to the aggregate principal amount of the Convertible Notes to be converted and paying or delivering, as the case may be, cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election, in respect of the remainder, if any, of the Company’s conversion obligation in excess of the aggregate principal amount of the Convertible Notes being converted, based on the then applicable conversion rate. The Convertible Notes will be guaranteed, on a full, joint and several basis, by each of the Company’s domestic subsidiaries that guarantees the Company’s obligations under its existing senior notes and its senior credit facilities.