(Bloomberg) -- Tapestry Inc. is planning to buy back $6.1 billion of bonds it sold to fund its now blocked purchase of Capri Holdings, after abandoning the deal due to antitrust pressure.
The owner of the Coach and Kate Spade brands will redeem the debt at 101 cents on the dollar or euro, according to language in the company’s bond documents. Buying back the notes at just a bit above par will hand paper losses to investors holding bonds that had recently traded higher.
The 10-year notes that Tapestry issued were trading at more than 109 cents on the dollar last month, before a federal judge blocked the company’s planned acquisition after concluding it would harm competition in the market for “accessible luxury” handbags. The bond traded at 103 cents on the dollar on Wednesday.
The deal was closely watched as it underscored how the Biden administration’s crackdown on acquisitions can impact the US corporate bond market. The incoming administration is expected to be more friendly to such deals and there could be more acquisitions after President-elect Donald Trump takes office in January.
Tapestry sold $4.5 billion of US dollar-denominated notes about a year ago, in maturities ranging from two years to 10 years. It also sold €1.5 billion of euro-denominated notes in maturities ranging from two years to eight years. The proceeds from both sales went to finance the acquisition.
Tapestry and Capri said they mutually decided to cancel their $8.5 billion merger plan due to antitrust regulators’ objections and a court order, according to a Thursday statement. Tapestry also announced a $2 billion share-repurchase plan, to be funded with cash on hand and future issuance of debt.
(Updates with bond details in the fifth paragraph.)
©2024 Bloomberg L.P.