BREAD FINANCIAL HOLDINGS, INC. 8-K

What Happened

• Bread Financial Holdings, Inc. announced on its Form 8-K that it established and issued a new series of preferred stock: 8.875% Fixed Rate Reset Non‑Cumulative Perpetual Preferred Stock, Series B. The company filed the Certificate of Designations with the Delaware Secretary of State on May 11, 2026 (effective May 12, 2026) and on May 12, 2026 issued and sold 5,400,000 depositary shares. Each depositary share represents a 1/40th interest in one share of the Series B Preferred Stock. The depositary shares were issued under a Deposit Agreement with Computershare.

Key Details

• Dividend rate/type: 8.875% fixed rate reset, non‑cumulative, perpetual preferred stock.
• Liquidation preference: $1,000 per full preferred share (pro rata to depositary shares).
• Shares issued: 5,400,000 depositary shares sold on May 12, 2026 (includes 600,000 sold under the underwriters’ option).
• Underwriting: Underwriting Agreement dated May 5, 2026 with Morgan Stanley, RBC Capital Markets, UBS, Wells Fargo Securities and Keefe, Bruyette & Woods as representatives; option allowed up to an additional 720,000 depositary shares.
• Restrictions: If the company fails to declare and either pay or set aside sufficient funds for the Series B dividend for the immediately preceding dividend period, the company’s ability to declare or pay dividends on junior stock or to repurchase/redeem/acquire parity or junior shares is restricted.

Why It Matters

• This issuance raises capital for Bread Financial while creating a new higher‑priority claim on dividends and liquidation proceeds (preferred with $1,000 liquidation preference). Because the Series B is non‑cumulative, missed dividends do not accumulate as an obligation, but failure to fund dividends triggers limits on dividends/repurchases for lower‑ranked stock, which can affect common shareholders and capital return plans. The depositary share structure (1/40th interest per depositary share) lets investors trade interests in the preferred stock without issuing fractional preferred shares directly. Exhibits to the filing include the Certificate of Designations, the Deposit Agreement, and counsel’s opinion.