Bread Financial issued 5 million depositary shares tied to a new series of preferred stock, adding a high-coupon, perpetual security to its capital structure. The shares carry a stated dividend rate of 9.375% and are non-cumulative, meaning dividends that are not declared do not accumulate for later payment.
The company also gave the underwriters an option to buy up to 750,000 additional depositary shares at the same price, exercisable for 30 days after Oct. 27.
- What was issued: Each depositary share represents 1/40th of a share of Bread Financial’s Series C preferred stock. The company’s 5 million shares therefore represent 125,000 preferred shares.
- Value and stated dividend: Each preferred share has a $1,000 liquidation preference, equivalent to $25 for each depositary share. At the stated 9.375% rate, the annual dividend would be $2.34375 per depositary share if declared and paid.
- Dividend protections: If Bread Financial does not declare and pay, or set aside enough to pay, the Series C dividend for the preceding dividend period, restrictions apply to dividends or distributions on stock ranking junior to the Series C. The company also faces restrictions on buying back or otherwise acquiring shares ranking equally with or below the Series C.
- Rights attached: Depositary-share holders receive proportional dividend, voting, redemption and liquidation rights associated with the preferred stock.
- Perpetual structure: The Series C is perpetual, with no maturity date specified in the announcement. Its dividends are non-cumulative.
The issuance adds a preferred-stock layer to Bread Financial’s capital structure. The announcement does not specify the offering proceeds or detail the timing and mechanics of future rate resets.