Bread Financial (BFH) to retire shares via capped call unwind tied to notes
Filing Impact
Filing Sentiment
Form Type
8-K
Rhea-AI Filing Summary
Bread Financial Holdings, Inc. entered into privately negotiated capped call unwind agreements with the financial institutions that were counterparties to its capped call transactions linked to its 4.25% Convertible Senior Notes due 2028. All of those notes were no longer outstanding as of December 31, 2025, and these new agreements terminate the related capped call transactions in full.
Under the unwind agreements, the option counterparties will deliver a number of Bread Financial common shares to the company, calculated using the average daily volume-weighted average price over one or more unwind periods. The company notes that, if all agreements had hypothetically settled using the February 17, 2026 price, it would have received and retired about 1.5 million shares, though the actual number will vary with share performance. Settlements are expected to complete on or before the end of February 2026, and any shares received will be in addition to, and not counted against, any current or future board-approved share repurchase authorizations.
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Insights
Bread Financial unwinds capped calls tied to retired convertibles, taking shares instead of cash.
Bread Financial is terminating capped call transactions that were originally designed to hedge dilution from its 4.25% Convertible Senior Notes due 2028. Since those notes are already fully retired, the hedges are now economically redundant, so unwinding them simplifies the capital structure.
The unwind consideration is paid in common shares, with the exact amount determined by average volume-weighted prices during specified unwind periods. The company indicates a hypothetical outcome of about 1.5 million shares retired at the February 17, 2026 price. This mechanism could modestly reduce share count, while hedge adjustments by counterparties may create trading activity in the stock during the unwind window.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported):
(Exact Name of Registrant as Specified in Charter)
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(614 ) 729-4000
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Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act | |||||
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Item 1.01 Entry into a Material Definitive Agreement.
On February 17, 2026, Bread Financial Holdings, Inc. (the “Company”) entered into separate, privately negotiated termination agreements (the “Capped Call Unwind Agreements”) with each of the financial institutions (the “Option Counterparties”) party to the capped call transactions (the “Capped Call Transactions”) that were previously entered into by the Company in connection with the issuance of its 4.25% Convertible Senior Notes due 2028 (the “Notes”) in June 2023. As of December 31, 2025, no Notes remained outstanding. The Capped Call Unwind Agreements provide for the termination in full of the Capped Call Transactions.
Pursuant to the Capped Call Unwind Agreements, the Option Counterparties will deliver to the Company a number of shares of common stock, par value $0.01 per share, of the Company (“Common Stock”) determined based upon the average of the daily volume-weighted average prices per share of the Common Stock during one or more averaging dates, subject to postponement in certain circumstances (each, an “Unwind Period”). For reference, if all of the Capped Call Unwind Agreements had hypothetically settled based on the volume-weighted average price of the Common Stock on February 17, 2026 (the date of entry into the Capped Call Unwind Agreements), the Company would have received and retired an aggregate of approximately 1.5 million shares of Common Stock from the Option Counterparties. The final number of shares that will actually be delivered at settlement is dependent upon the performance of the Common Stock during the applicable Unwind Period, and such number of shares may be more or less than the number listed above. In connection with the termination of the Capped Call Transactions, the Company expects the Option Counterparties or their respective affiliates to adjust their related hedge positions, which may involve the purchase or sale of shares of Common Stock in the open market or other transactions with respect to the Common Stock.
Settlement of each Capped Call Unwind Agreement is expected to occur one business day following the conclusion of the applicable Unwind Period. All of the Capped Call Unwind Agreements are currently expected to settle on or before the end of February 2026. For the avoidance of doubt, the shares of Common Stock received by the Company pursuant to the Capped Call Unwind Agreements shall be independent of, and shall not reduce, any present or future share repurchase authorization approved by the Board of Directors of the Company.
The foregoing description of the Capped Call Unwind Agreements does not purport to be complete and is qualified in its entirety by reference to the full text of the form of the Capped Call Unwind Agreement, which is filed with this Current Report on Form 8-K as Exhibit 10.1 and is incorporated herein by reference.
Item 1.02 Termination of a Material Definitive Agreement.
The information set forth under Item 1.01 of this Current Report on Form 8-K with respect to the Capped Call Unwind Agreements is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit No. | Document Description | |||||||
10.1 | Form of Capped Call Unwind Agreement. | |||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). | |||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Bread Financial Holdings, Inc. | ||||||||
| Date: February 18, 2026 | By: | /s/ Joseph L. Motes III | ||||||
| Joseph L. Motes III Executive Vice President, Chief Administrative Officer, General Counsel and Secretary | ||||||||
FAQ
What did Bread Financial (BFH) announce in this 8-K filing?
Bread Financial entered into capped call unwind agreements that fully terminate its prior capped call transactions linked to 4.25% Convertible Senior Notes due 2028. Those notes were already fully retired as of December 31, 2025, so the unwind simplifies its capital structure and related hedging arrangements.
How will the capped call unwind affect Bread Financial’s common shares?
The option counterparties will deliver Bread Financial common shares, with the quantity based on average daily volume-weighted prices during defined unwind periods. The company indicates that, using the February 17, 2026 share price, it would have hypothetically received and retired about 1.5 million shares, though the final amount will differ.
Why is Bread Financial unwinding capped call transactions related to its 4.25% convertible notes?
The capped calls were originally entered in June 2023 in connection with 4.25% Convertible Senior Notes due 2028. As of December 31, 2025, no notes remained outstanding, making the hedging structures unnecessary. Unwinding them removes an obsolete derivative overlay from the company’s capital structure.
When are Bread Financial’s capped call unwind agreements expected to settle?
Each capped call unwind agreement is expected to settle one business day after its respective unwind period ends. The company currently expects all of the unwind agreements to settle on or before the end of February 2026, consolidating the transition into a short, defined time frame.
Will shares from the capped call unwind count against Bread Financial’s repurchase authorizations?
No, the company states that any shares of common stock it receives under the capped call unwind agreements will be independent of, and will not reduce, any present or future share repurchase authorization approved by its Board of Directors, effectively separating this unwind from ordinary buyback programs.
How might the capped call unwind impact trading in Bread Financial (BFH) stock?
The company expects option counterparties or their affiliates to adjust hedge positions as the capped call transactions terminate. These hedge adjustments may involve buying or selling Bread Financial common shares in the open market or other transactions, potentially influencing trading volumes during the unwind periods.
Filing Exhibits & Attachments
5 documentsAgreements & Contracts
Bread Financial Holdings, Inc.