8-KMaterial AgreementsFinancial EventsRegulation FD+1

DOLLAR TREE, INC. 8-K Report, Material Agreement (Sep 17, 2013)

Filed September 17, 2013For Securities:DLTR

Summary

Dollar Tree, Inc. (DLTR) announced on September 17, 2013, significant capital allocation initiatives focused on returning value to shareholders. The company entered into two share repurchase agreements totaling $1 billion with JPMorgan Chase Bank, National Association. These are accelerated share repurchase (ASR) agreements, one collared and one uncollared, designed to buy back the company's common stock. The repurchase program is funded by a recently issued $750 million in senior notes. In conjunction with these actions, Dollar Tree also announced a new board authorization for an additional $2 billion in share repurchases, which, after the ASRs are completed, will leave $1 billion available under the new authorization. This move signals strong confidence from management in the company's financial position and its stock's valuation, aiming to enhance shareholder returns through aggressive share buybacks.

Key Highlights

  • 1Dollar Tree is initiating a $1 billion share repurchase program through two Accelerated Share Repurchase (ASR) agreements.
  • 2The ASR agreements are funded by a recent private placement of $750 million in senior notes issued by its subsidiary, Dollar Tree Stores, Inc.
  • 3The $1 billion ASR program consists of a $500 million collared ASR and a $500 million uncollared ASR.
  • 4These ASR agreements are variable maturity, with calculation periods ending on or before June 2014.
  • 5The company announced a new board authorization for an additional $2 billion in share repurchases.
  • 6Following the completion of the $1 billion ASRs, Dollar Tree will have $1 billion remaining under the new $2 billion authorization.
  • 7The company amended its credit agreement to facilitate the issuance of the senior notes.

Frequently Asked Questions

Dollar Tree is entering into $1 billion in Accelerated Share Repurchase (ASR) agreements, funded by the issuance of $750 million in senior notes. Additionally, the Board of Directors has authorized an additional $2 billion for share repurchases. After the $1 billion ASR program is completed, $1 billion will remain available under the new $2 billion authorization.

The $1 billion ASR program is primarily financed by the proceeds from a $750 million private placement of senior notes issued by Dollar Tree Stores, Inc. The company also amended its credit agreement to support this financing.

An Accelerated Share Repurchase (ASR) agreement is a contract where a company buys back its own shares from a financial institution. The institution typically buys the shares on the open market and then resells them to the company at a discount. Dollar Tree is using ASRs to quickly and efficiently repurchase a significant amount of its stock, signaling confidence in its valuation and aiming to enhance shareholder value by reducing the number of outstanding shares.

The uncollared ASR agreement allows Dollar Tree to repurchase shares at a price based on the volume-weighted average price (VWAP) less a discount, with the exact number of shares determined after the calculation period. The collared ASR agreement also uses a VWAP less a discount, but it includes a minimum and maximum number of shares that will be repurchased, providing some price protection to both the company and the dealer within a defined range.