8-KMaterial AgreementsFinancial EventsSecurities & Listing+1

Burlington Stores, Inc. 8-K Report, Material Agreement (Sep 18, 2023)

Filed September 18, 2023For Securities:BURL

Summary

Burlington Stores, Inc. (BURL) has announced the successful closing of a private offering of approximately $297 million in aggregate principal amount of 1.25% convertible senior notes due 2027. This offering involved both an exchange of existing 2.25% convertible notes due 2025 and a private placement to new investors. This strategic move aims to extend Burlington's debt maturity profile and reduce its interest expense, with the new notes carrying a lower coupon rate. The company also repurchased approximately $25.6 million worth of its common stock during the transaction. Investors should note that the conversion price of these new notes implies a premium to the stock's recent trading price, and the potential for future dilution exists should the notes be converted.

Key Highlights

  • 1Closed offering of $297 million in aggregate principal amount of 1.25% convertible senior notes due 2027.
  • 2Transaction included an exchange of existing 2.25% convertible notes and a private placement to new investors.
  • 3Reduced annual interest expense due to the lower coupon rate on the new notes compared to the exchanged notes.
  • 4Company repurchased 165,975 shares of common stock at $155.42 per share as part of the transaction.
  • 5New notes are convertible into common stock at an initial conversion rate of 4.8560 shares per $1,000 principal amount, implying an initial conversion price of approximately $205.93.
  • 6Conversion price represents a premium of approximately 32.50% over the stock price on September 7, 2023.
  • 7Potential for up to 1,911,372 shares of common stock to be issued upon full conversion and subject to adjustments.

Frequently Asked Questions

The primary purpose of this offering was to refinance existing debt by exchanging higher-interest 2.25% convertible notes due 2025 for new 1.25% convertible notes due 2027. This transaction extends the company's debt maturity and reduces its interest expense.

The company repurchased approximately $25.6 million of its common stock as part of the transaction, which could provide some short-term support. However, investors should be aware of potential future dilution if the new convertible notes are converted into shares of common stock, as up to approximately 1.9 million shares could be issued.

The new notes bear a 1.25% annual interest rate, mature on December 15, 2027, and are convertible into Burlington's common stock at an initial price of approximately $205.93 per share. The company can redeem the notes under specific conditions starting in December 2025.

The conversion premium is approximately 32.50% over the stock price on September 7, 2023. This means the notes can only be converted into stock if the stock price rises significantly above the price at which the offering was priced, indicating that the company and investors anticipate future stock price appreciation.