What is American Express doing with this 8-K filing?

American Express is announcing its intention to conduct a public offering of new depositary shares, each representing an interest in a new series of preferred stock (Series D). The funds raised are intended to be used to redeem existing preferred stock series (Series B and Series C).

Why is American Express offering new preferred stock and redeeming old ones?

This is likely a refinancing strategy. By issuing new preferred stock, American Express aims to potentially replace higher-cost preferred stock (5.200% and 4.900%) with new shares that may have a more favorable coupon rate or terms, thereby reducing its overall cost of capital for preferred equity.

Is the redemption of Series B and Series C preferred stock guaranteed?

No, the redemption is not guaranteed. The success of the new offering, including its pricing and closing, is dependent on market conditions and other factors. If the offering does not proceed as planned, American Express may not redeem the existing preferred stock, or may redeem only a portion of it.

What are the risks for investors in the proposed offering?

The primary risk for investors in the new offering is that it may not be completed if market conditions are unfavorable or other factors prevent it from pricing. For holders of Series B and Series C preferred stock, the risk is that their shares may not be redeemed, or may be redeemed at a time or in an amount not anticipated, or that the redemption may be only partial.

AXP 8-K SEC Disclosure — Jul 27, 2021

Summary

American Express Company (AXP) announced on July 27, 2021, its intention to launch a proposed public offering of new depositary shares. Each depositary share represents a fractional interest in a new series of Fixed Rate Reset Noncumulative Preferred Shares, Series D. The primary stated purpose of this offering is to raise capital that will be used to partially or fully redeem its existing Series B (5.200% Fixed Rate/Floating Rate Noncumulative Preferred Shares) and Series C (4.900% Fixed Rate/Floating Rate Noncumulative Preferred Shares). Investors should note that the pricing and successful completion of this offering, and consequently any redemption of the older preferred stock series, are subject to market conditions and other factors. There is no guarantee that the offering will price or close, or that American Express will proceed with the redemption of the Series B and/or Series C preferred stock, or the extent and timing of any such redemption. The details of the offering are further elaborated in the preliminary prospectus supplement filed with the SEC.

Key Highlights

1AXP announced a proposed public offering of new depositary shares representing a new series of preferred stock (Series D).
2The proceeds from this offering are intended to refinance existing preferred stock, specifically Series B (5.200%) and Series C (4.900%).
3This move suggests a strategy to potentially lower the company's cost of preferred equity financing.
4The offering is subject to market conditions, and there's no assurance it will price or close.
5Redemption of Series B and Series C preferred stock is contingent on the successful completion and pricing of the new offering.
6The company has filed a preliminary prospectus supplement with the SEC detailing the offering.

AMERICAN EXPRESS CO 8-K Report, Corporate Update (Jul 27, 2021)

Summary

Key Highlights

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