Specialty retailer American Eagle Outfitters Inc. (AEO) announced Friday that it has 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 ASR has been entered into in connection with AEO's existing share repurchase authorization of 30 million shares.
The company has also 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.
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.
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