AEO Inc. Announces Series of Measures to Strengthen Capital Structure

PITTSBURGH–(BUSINESS WIRE)–American Eagle Outfitters Inc. (NYSE: AEO) today announced that it has entered into exchange agreements with certain holders of its 3.75% Convertible Senior Notes due 2025 in exchange for a combination of cash and common stock of the company.

The 2025 notes to be exchanged represent approximately $342 million of the outstanding principal amount. After the exchange, approximately $70 million in total principal will remain unpaid. Exchange transactions are expected to close on June 8, 2022.

The company has also entered into an accelerated stock repurchase (ASR) agreement with JPMorgan Chase Bank, National Association to repurchase $200 million of common stock in the company. This equates to approximately 16.7 million shares based on the June 2, 2022 closing price and represents approximately 8% of the company’s fully diluted shares outstanding as of that date. The final number of shares to be repurchased will be based on the volume-weighted average trading price of the company’s common stock during a reference period. The ASR was entered into as part of AEO’s existing share repurchase authorization of 30 million shares.

AEO expects to fund the cash portion of the amounts payable under the swap agreements and the ASR using available cash and borrowings under the company’s existing $400 million ABL facility.

The company is also pursuing an increase and extension of its ABL facility to $600 million over a 5-year term, to unlock additional liquidity. The Company has not yet entered into definitive documentation, and there is no assurance that the ABL Credit Facility will be amended, or the terms of any such amendment.

This press release does not constitute an offer to sell or a solicitation to buy any of the securities described herein, and there will be no offer, solicitation or sale of such securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. .

Advisors

J. Wood Capital Advisors acted as financial advisor and placement agent for the Company, Wachtell, Lipton, Rosen & Katz as legal advisor.

About American Eagle Outfitters, Inc.

American Eagle Outfitters, Inc. (NYSE: AEO) is a leading global specialty retailer offering high-quality, fashionable apparel, accessories and personal care products at affordable prices under its American Eagle® and Aerie® brands. . Our goal is to show the world that there is REAL power in youthful optimism. The company operates stores in the United States, Canada, Mexico and Hong Kong, and ships to 81 countries worldwide through its websites. American Eagle and Aerie products are also available at more than 200 international locations operated by licensees in 25 countries. For more information, please visit www.aeo-inc.com.

SAFETY STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This release and related management statements contain forward-looking statements (as that term is defined in the Private Securities Litigation Reform Act of 1995), which represent our expectations or beliefs regarding future events. All forward-looking statements made by the company involve significant risks and uncertainties and are subject to change based on many important factors, some of which may be beyond the company’s control. Words such as “estimate”, “project”, “plan”, “believe”, “expect”, “anticipate”, “intend”, “potential” and similar expressions may identify statements forward-looking. Except as required by applicable law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, and even if experience or future changes clearly indicate that the projected results expressed or implied will not be achieved. The following factors, in addition to the risks disclosed in Item 1A., Risk Factors, of our Annual Report on Form 10-K for the fiscal year ended January 29, 2022 and in any other filings we may make with the Securities and Exchange In some instances, fees have affected, and may affect in the future, the financial performance of the Company and could cause actual results for fiscal 2022 and beyond to differ materially from those expressed or implied. -heard in any of the forward-looking statements included in this release or otherwise made by management: the adverse impacts of the COVID-19 pandemic and related operational disruptions; the risk that the company’s operating, financial and capital plans will not be realized; our inability to anticipate customer demand and changing fashion trends and manage our inventory accordingly; the seasonality of our business; our inability to achieve the store’s expected financial performance; our inability to respond to increases in the cost of raw materials, labor and energy; our inability to gain market share in the face of declining shopping center footfall; our inability to respond to changes in e-commerce and take advantage of omnichannel demands; our inability to expand internationally; difficulties with our international commodity sourcing strategies; challenges related to information technology systems, including protection against security breaches; and global economic, public health, social, political and financial conditions, and the resulting impact on consumer confidence and spending, as well as other changes in consumers’ discretionary spending patterns, which may have a material adverse effect on our business, results of operations and liquidity.