Tapestry, Inc. (TPR, Financial), a leading house of modern luxury accessories and lifestyle brands, has announced a significant financial maneuver with the initiation of accelerated share repurchase agreements (ASR Agreements) totaling up to $2 billion. This move is part of the company's ongoing share repurchase program, which was authorized by the board of directors in May 2022.
On November 21, 2024, Tapestry entered into ASR Agreements with financial giants Bank of America, N.A. and Morgan Stanley & Co. LLC. The company plans to fund these repurchases through a combination of $750 million in borrowings from a new term loan credit facility, approximately $1 billion from its revolving credit facility, and available cash on hand. Tapestry intends to refinance the term loan credit facility with new debt issuance or other liquidity sources, alongside cash reserves.
Under the terms of the ASR Agreements, Tapestry will make a $2 billion payment to the dealers on November 26, 2024, receiving an initial delivery of 28,363,766 shares of common stock. The final number of shares repurchased will be determined based on the average daily volume-weighted average price of the stock during the agreement's term, subject to adjustments. The final settlements are expected by the first quarter of fiscal 2026, ending September 27, 2025, with provisions for earlier termination under specific conditions.
In conjunction with the ASR Agreements, Tapestry has secured a $750 million senior unsecured term loan facility to partially finance the share repurchases. This facility, arranged with Bank of America, N.A. as the administrative agent, involves BofA Securities, Inc. and Morgan Stanley Senior Lending, Inc. as joint lead arrangers and bookrunners. The loan matures six months post-funding and carries an interest rate tied to the term Secured Overnight Financing Rate plus 1.125%.
The Credit Agreement includes standard representations, warranties, and covenants, with provisions for prepayment of loans from net cash proceeds of certain asset sales or debt and equity issuances. In the event of default, the outstanding principal and accrued interest may become immediately due.
This strategic financial initiative underscores Tapestry's commitment to enhancing shareholder value through disciplined capital management and leveraging its financial flexibility to execute significant share repurchases.
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