8-KMaterial AgreementsFinancial EventsSecurities & Listing+2

Burlington Stores, Inc. 8-K Report, Material Agreement (Apr 16, 2020)

Filed April 16, 2020For Securities:BURL

Summary

This 8-K filing from Burlington Stores, Inc. (BURL) on April 16, 2020, details the company's successful closing of two significant debt offerings: $805 million in 2.25% Convertible Senior Notes due 2025, and $300 million in 6.250% Senior Secured Notes due 2025, issued by its subsidiary Burlington Coat Factory Warehouse Corporation (BCFWC). These offerings aim to bolster the company's general corporate purposes, likely to provide liquidity and financial flexibility during a period of economic uncertainty. The convertible notes carry a conversion premium of approximately 32.50% over the stock price on April 13, 2020, with potential for dilution if converted. The secured notes are guaranteed by key subsidiaries and are secured by a first-priority lien on specific collateral and a second-priority lien on other assets, subordinate to their ABL Line of Credit. The dual financing strategy provides a mix of debt with different risk and conversion profiles.

Key Highlights

  • 1Burlington Stores (BSI) raised $805 million through the issuance of 2.25% Convertible Senior Notes due 2025.
  • 2A subsidiary, Burlington Coat Factory Warehouse Corporation (BCFWC), issued $300 million in 6.250% Senior Secured Notes due 2025.
  • 3Proceeds from both offerings are designated for general corporate purposes.
  • 4The convertible notes have an initial conversion price of approximately $220.18 per share, representing a 32.50% premium over the stock price on April 13, 2020.
  • 5The secured notes are guaranteed by several subsidiaries and secured by a first-priority lien on certain assets and a second-priority lien on others, subordinate to the ABL Line of Credit.
  • 6The convertible notes can be redeemed by BSI starting April 15, 2023, under specific conditions.
  • 7The secured notes have various redemption options, including early redemption at a premium prior to April 15, 2022, and phased redemption prices thereafter.

Frequently Asked Questions

The proceeds from both the Convertible Senior Notes and the Senior Secured Notes are intended for general corporate purposes, providing Burlington Stores with enhanced financial flexibility and liquidity.

The convertible notes are convertible into BSI's common stock under certain conditions. If converted, this could lead to dilution for existing shareholders. The initial conversion price represents a significant premium to the stock price at the time of pricing, indicating the company's belief in future stock appreciation.

The Senior Secured Notes are guaranteed by key subsidiaries of Burlington Stores. They are secured by a first-priority lien on specific collateral, referred to as 'Term Loan/Notes Priority Collateral,' and a second-priority lien on other assets, known as 'ABL Priority Collateral.' The lien on ABL Priority Collateral is junior to the lien securing the company's ABL Line of Credit.

The Convertible Senior Notes cannot be redeemed by Burlington Stores prior to April 15, 2023. On or after this date, redemption is possible under specific conditions related to the stock price. The Senior Secured Notes have more immediate redemption options, with BCFWC able to redeem them at a premium before April 15, 2022, and at varying percentages of par value thereafter.