Feedback Here

fbook  tweeter  linkin YouTube
Global contents also translated in Chinese

Gap to sell $1.5 billion junk bond to slash borrowing costs

  

Gap Inc plans to sell a $1.5 billion junk-bond to help it buy back expensive debt raised earlier in the pandemic last year. The deal will slash the company’s borrowing costs as it focuses on growth after COVID-19 hurt clothing sales. As per a Business of Fashion report, split in two parts, the company’s new note will help fund a tender offer to buy back three secured bonds that Gap issued in April of 2020 with coupons ranging from 8.375 percent to 8.875 percent. The existing notes are backed by a first-priority claim on the company’s real estate, intellectual property and equity interests of some domestic units, and helped the company shore up liquidity last year.

Gap’s tender offer will be funded by proceeds from the new note sale and cash on hand, according to a news release. The company will pay investors a premium ranging from 106.25 to 116.5 cents on the dollar, depending on the notes and by which deadline investors say yes. The early deadline for the tender offer is Sept. 24, and the final deadline is on Oct. 8.

The company is also asking investors to accept changes to bond documentation that includes eliminating certain restrictive covenants and releasing the collateral for the notes. Its existing bonds currently trade well above par, ranging from 109 to almost 116 cents on the dollar.

 
LATEST TOP NEWS
 
 
MOST POPULAR NEWS