BREAD FINANCIAL HOLDINGS, INC. 8-K

What Happened

• On February 17, 2026, Bread Financial Holdings, Inc. entered into privately negotiated termination agreements (the "Capped Call Unwind Agreements") with the financial institutions that were counterparties to its capped call transactions originally tied to the 4.25% Convertible Senior Notes due 2028 (issued June 2023).
• The Company states that as of December 31, 2025, no Notes remained outstanding. Under the Unwind Agreements, the counterparties will deliver a number of shares of Bread Financial common stock based on the volume-weighted average price (VWAP) during one or more averaging dates (the "Unwind Period"). If settled using the VWAP on February 17, 2026, the Company would have received and retired approximately 1.5 million shares (final share count depends on actual VWAP during the Unwind Period). Settlement is expected one business day after each Unwind Period and is currently expected to occur on or before the end of February 2026. The counterparties may adjust hedge positions, which could involve open-market purchases or sales of common stock.

Key Details

• Date of agreements: February 17, 2026.
• Original instrument: capped calls tied to 4.25% Convertible Senior Notes due 2028 (issued June 2023).
• Notes status: No Notes outstanding as of December 31, 2025.
• Potential shares: Hypothetical VWAP settlement on Feb 17, 2026 ≈ 1.5 million shares to be received and retired (final amount variable).
• Settlement timing: Expected one business day after Unwind Periods; expected on or before end of February 2026.
• Shares received from the unwind are independent of, and do not reduce, any Board-approved share repurchase authorization.

Why It Matters

• This filing shows Bread Financial is formally closing out hedges that were linked to convertible notes that are no longer outstanding. The unwind will result in the company receiving and retiring shares, which could reduce the outstanding share count depending on final settlement—potentially modestly affecting EPS and ownership percentages.
• Because counterparties may buy or sell shares to adjust hedges, there could be short-term trading activity or price impact in the company’s stock around settlement.
• There is no new debt or financing disclosed here; the action is a termination of existing hedge agreements tied to previously issued convertible notes.