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BORROWINGS OF LONG-TERM AND OTHER DEBT | 6 Months Ended
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Jun. 30, 2025
Debt Disclosure [Abstract] |
BORROWINGS OF LONG-TERM AND OTHER DEBT | BORROWINGS OF LONG-TERM AND OTHER DEBT Long-term and other debt consisted of the following as of the dates presented:
Description |  | June 30, 2025 |  | December 31, 2024 |  | Contractual Maturities |  | Interest Rates
(Millions, except percentages) |  |  |  |  |  |  |  |
Long-term and other debt: |  |  |  |  |  |  |  |
Revolving line of credit |  | $ | — |  |  | $ | — |  |  | October 2028 |  | (1)
Senior notes due 2026 |  | — |  |  | 100 |  |  | January 2026 |  | 7.00%
Convertible senior notes due 2028 |  | 3 |  |  | 10 |  |  | June 2028 |  | 4.25%
Senior notes due 2029 |  | 750 |  |  | 900 |  |  | March 2029 |  | 9.75%
Subordinated notes due 2035 |  | 400 |  |  | — |  |  | June 2035 |  | 8.38%
Subtotal |  | 1,153 |  |  | 1,010 |  |  |  |  |
Less: Unamortized debt issuance costs |  | 15 |  |  | 11 |  |  |  |  |
Total long-term and other debt |  | $ | 1,138 |  |  | $ | 999 |  |  |  |  |
Debt issued by consolidated VIEs: |  |  |  |  |  |  |  |
Fixed rate asset-backed term note securities |  | $ | 1,350 |  |  | $ | 1,350 |  |  | Various – May 2026 to Jul. 2027 |  | 4.62% to 5.47%
Conduit asset-backed securities |  | 1,743 |  |  | 3,213 |  |  | Various – Sep. 2025 to Feb. 2026 |  | (2)
Subtotal |  | 3,093 |  |  | 4,563 |  |  |  |  |
Less: Unamortized debt issuance costs |  | 4 |  |  | 5 |  |  |  |  |
Total debt issued by consolidated VIEs |  | $ | 3,089 |  |  | $ | 4,558 |  |  |  |  |
Total borrowings of long-term and other debt |  | $ | 4,227 |  |  | $ | 5,557 |  |  |  |  |
______________________________ (1)The interest rate is based upon the Secured Overnight Financing Rate (SOFR) plus an applicable margin. (2)The interest rate is based upon SOFR, or the asset-backed commercial paper costs of each individual conduit provider plus an applicable margin. As of June 30, 2025 the interest rates ranged from 5.41% to 5.42% with a weighted average rate of 5.41%. As of December 31, 2024 the interest rates ranged from 5.48% to 5.60% with a weighted average rate of 5.54%. Certain of our long-term debt agreements include various restrictive financial and non-financial covenants. If we do not comply with certain of these covenants and an event of default occurs and remains uncured, the maturity of amounts outstanding may be accelerated and become payable, and, with respect to our credit agreement, the associated commitments may be terminated. As of June 30, 2025, we were in compliance with all such covenants. Long-term and Other Debt During the first half of 2025, we engaged in a number of financing-related transactions, including the redemption of the remaining $100 million in aggregate principal amount of our 7.000% Senior Notes due 2026, the repurchase of another portion of our 4.25% Convertible Senior Notes due 2028 and the completion of a cash tender offer (the Tender Offer) to repurchase $150 million in aggregate principal amount of our 9.750% Senior Notes due March 2029, in each case with cash on hand. We also closed on our offering of $400 million aggregate principal amount of 8.375% Fixed-Rate Reset Subordinated Notes due 2035. Each of these transactions, as well as other matters relating to our liquidity and capital resources during the first quarter, are described in more detail below. Credit Agreements In October 2024, we entered into our amended credit agreement with Parent Company, as borrower, certain of our domestic subsidiaries, as guarantors, JPMorgan Chase Bank, N.A., as administrative agent and lender, and various other financial institutions, as lenders, which provides for a $700 million senior unsecured revolving credit facility (the Revolving Credit Facility), which matures in October 2028. As of June 30, 2025, our Revolving Credit Facility was undrawn and all $700 million remained available for future borrowings. Senior Notes Due 2026, 2028 and 2029 The Senior Notes set forth below are each governed by their respective indenture that includes usual and customary negative covenants and events of default. These Senior Notes are unsecured and are guaranteed on a senior unsecured basis by certain of our existing and future domestic restricted subsidiaries that incur or in any other manner become liable for any debt under our domestic credit facilities, including the Revolving Credit Facility. 7.000% Senior Notes due 2026 In September 2020, we issued and sold $500 million aggregate principal amount of 7.000% Senior Notes due January 15, 2026 (the Senior Notes due 2026). The Senior Notes due 2026 accrue interest on the outstanding principal amount at the rate of 7.000% per annum from September 22, 2020, payable semi-annually in arrears, on March 15 and September 15 of each year, beginning on March 15, 2021. The Senior Notes due 2026 will mature on January 15, 2026, subject to earlier repurchase or redemption. In January 2024, we redeemed $400 million in aggregate principal amount of the Senior Notes due 2026 and in January 2025, with cash on hand we redeemed the remaining $100 million. 4.25% Convertible Senior Notes Due 2028 In June 2023, we issued and sold $316 million aggregate principal amount of 4.25% Convertible Senior Notes due 2028 (the Convertible Notes). The Convertible Notes bear interest at an annual rate of 4.25%, payable semi-annually in arrears on June 15 and December 15 of each year. The Convertible Notes mature on June 15, 2028, unless earlier repurchased, redeemed or converted. In connection with the issuance of the Convertible Notes, we entered into privately negotiated capped call (Capped Call) transactions with certain financial institution counterparties. These transactions are expected generally to reduce potential dilution to our common stock upon any conversion of Convertible Notes and/or offset any cash payments we are required to make in excess of the principal amount of the Convertible Notes, with such reduction and/or offset subject to a cap, based on the cap price. For additional information on the issuance and subsequent repurchases of our Convertible Notes, as well as our Capped Call transactions, see Note 10, “Borrowings of Long-Term and Other Debt” to our 2024 Form 10-K. In the first quarter of 2025, a holder of Convertible Notes approached us to repurchase Convertible Notes, and we entered into a privately-negotiated repurchase agreement with the holder, repurchasing $7 million aggregate principal amount of outstanding Convertible Notes. The final purchase price, or settlement value, for the repurchase was $11 million, which was funded with cash on hand. In connection with the repurchase, we recognized a $2 million inducement expense in Other non-interest expenses representing the total settlement value, inclusive of transaction fees, in excess of the total conversion value (calculated in accordance with the indenture governing the Convertible Notes), as well as a $2 million reduction in Additional paid-in capital (APIC) related to the total conversion value paid in excess of the carrying value of the Convertible Notes repurchased and a deferred tax impact. This repurchase was negotiated and settled during the first quarter; therefore, there were no embedded conversion features requiring bifurcation and derivative accounting as of March 31, 2025. As of June 30, 2025, $3 million of Convertible Notes remained outstanding. We may, from time to time, seek to retire or repurchase our remaining outstanding Convertible Notes through cash purchases or exchanges for other securities, in open market purchases, tender offers, privately negotiated transactions or otherwise. All of the Capped Call transactions continue to remain outstanding, notwithstanding repurchases of our Convertible Notes. Although we do not trade or speculate in derivatives, we may seek to opportunistically terminate the Capped Call transactions (in full or in part from time to time) or leave the Capped Call transactions outstanding, possibly until maturity, in any such case with the objective of optimizing the shareholder value we receive under these transactions. 9.750% Senior Notes due 2029 In January 2024, we issued and sold an additional $300 million aggregate principal amount of 9.750% Senior Notes due 2029 (Senior Notes due 2029) at an issue price of 101.00% of principal plus accrued interest from December 22, 2023. The Senior Notes due 2029 issued in January 2024 were issued as additional notes under the same indenture pursuant to which the initial $600 million of Senior Notes due 2029 were issued in December 2023. The Senior Notes due 2029 that were issued in both December 2023 and January 2024 constitute a single series of notes and have the same terms, other than the issue date and issue price. The Senior Notes due 2029 accrue interest on the outstanding principal amount at the rate of 9.750% per annum from December 22, 2023, payable semi-annually in arrears, on March 15 and September 15 of each year, beginning on March 15, 2024. The Senior Notes due 2029 will mature on March 15, 2029, unless subject to earlier repurchase or redemption. In June 2025, we completed a cash Tender Offer pursuant to which we repurchased $150 million in aggregate principal amount of our 9.750% Senior Notes due 2029 (the Senior Notes due 2029). The consideration paid in the Tender Offer for each $1,000 principal amount of the Senior Notes due 2029 was $1,071, plus accrued and unpaid interest. In connection with the repurchase, we recognized a $13 million loss on extinguishment in Other non-interest expenses representing the total settlement value, inclusive of transaction fees, in excess of the carrying value of the Senior Notes due 2029. Following the completion of the Tender Offer, $750 million in the aggregate principal amount of the Senior Notes due 2029 remained outstanding as of June 30, 2025 and will mature in March 2029, subject to any earlier repurchase or redemption. 8.375% Subordinated Notes Due 2035 In March 2025, we issued and sold $400 million 8.375% Fixed-Rate Reset Subordinated Notes due June 2035 (the Subordinated Notes). The Subordinated Notes were issued pursuant to an indenture between the Company and U.S. Bank Trust Company, National Association, as trustee. The Subordinated Notes accrue interest on the outstanding principal amount (i) at a rate per annum equal to 8.375% from, and including, March 10, 2025, to, but excluding, June 15, 2030 (the Reset Date), and (ii) from, and including, the Reset Date to, but excluding, the maturity date at a rate per annum equal to the Five-Year U.S. Treasury Rate as of the date that is two business days prior to the Reset Date, plus 430 basis points. Interest on the Subordinated Notes is payable semiannually in arrears in June and December of each year, beginning in June 2025. The Subordinated Notes will mature in June 2035, unless earlier repurchased or redeemed. Tender Offer for 9.750% Senior Notes Due 2029 and 8.375% Subordinated Notes Due 2035 On July 24, 2025, we commenced a cash tender offer (the Third Quarter Tender Offer) to purchase up to $150 million aggregate principal amount of certain of our outstanding notes, including up to $100 million aggregate principal amount of Senior Notes due 2029 and up to $50 million aggregate principal amount of Subordinated Notes due 2035. The terms and conditions of the Third Quarter Tender Offer, including the amounts referenced in the prior sentence, are set forth in the Offer to Purchase and are subject to change. The total consideration payable for each $1,000 principal amount of Notes will be determined based on a modified “Dutch Auction” procedure. The Third Quarter Tender Offer is expected to close in August 2025. Debt Issued by Consolidated VIEs An asset-backed security is a security whose value and income payments are derived from and collateralized by a specified pool of underlying assets – in our case, our credit card loans. The sale of the pool of underlying assets to general investors is accomplished through a securitization process. We regularly sell our credit card loans to our Trusts, which are consolidated. The liabilities of these consolidated VIEs include asset-backed securities for which creditors, or beneficial interest holders, do not have recourse to our general credit. Conduit Facilities We maintained committed syndicated bank Conduit Facilities to support the funding of our credit card loans for our Trusts. Borrowings outstanding under each private Conduit Facility bear interest at a margin above SOFR, or the asset-backed commercial paper costs of each individual conduit provider. The table below summarizes our conduit capacities, borrowings and maturities for the periods presented:
(Millions) |  | December 31, 2024 |  | Commitment |  | June 30, 2025 |  |
Conduit Facilities |  | Capacity |  | Drawn (6) |  | Change |  | Capacity |  | Drawn (6) |  | Maturity Date (7)
Comenity Bank |  |  |  |  |  |  |  |  |  |  |  |
WFNMNT 2009-VFN (1) |  | $ | 2,650 |  |  | $ | 1,955 |  |  | $ | — |  |  | $ | 2,650 |  |  | $ | 1,363 |  |  | October 2025
WFNMT 2009-VFC1 (2) |  | — |  |  | 141 |  |  | — |  |  | — |  |  | — |  |  | — |
Comenity Capital Bank |  |  |  |  |  |  |  |  |  |  |  |
WFCMNT 2009-VFN (3) |  | 2,250 |  |  | 867 |  |  | (250) |  |  | 2,000 |  |  | 380 |  |  | February 2026
CCAST 2023-VFN1 (4) |  | 250 |  |  | 250 |  |  | — |  |  | 250 |  |  | — |  |  | September 2025
CCAST 2024-VFN1 (5) |  | 200 |  |  | — |  |  | (200) |  |  | — |  |  | — |  |  | — |
Total |  | $ | 5,350 |  |  | $ | 3,213 |  |  | $ | (450) |  |  | $ | 4,900 |  |  | $ | 1,743 |  |  |
__________________________________ (1)2009-VFN Conduit issued under World Financial Network Credit Card Master Note Trust (WFNMNT). (2)2009-VFC1 Conduit issued under World Financial Network Credit Card Master Trust III (WFNMT) was retired following controlled amortization, meaning the period in which principal collections are accumulated to pay down the outstanding principal amount of the notes issued under the Conduit Facility, in June 2025 pursuant to the termination, consent and waiver agreement. (3)2009-VFN Conduit issued under World Financial Capital Master Note Trust (WFCMNT). In February 2025, the 2009-VFN Conduit commitment was reduced by $250 million to $2 billion, and the Maturity Date extended to February 2026. (4)2023-VFN1 Conduit issued under Comenity Capital Asset Securitization Trust (CCAST). (5)2024-VFN1 Conduit issued under CCAST was retired in February 2025 pursuant to the termination, consent and waiver agreement. (6)Amounts drawn do not include $0.5 billion and $1.1 billion of debt issued by the Trusts as of June 30, 2025 and December 31, 2024, respectively, which were not sold, but were retained by us as a credit enhancement and therefore have been eliminated from the Total. (7)Maturity Date with respect to conduit borrowings means the date on which the revolving period for the applicable Conduit Facility expires. The revolving period may be extended or renewed (unless an early amortization event occurs prior to the Maturity Date). Absent the extension or renewal of the revolving period, the Conduit Facility shall enter controlled amortization on the Maturity Date and may no longer be drawn upon.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 8A -Publisher FASB -URI https://asc.fasb.org/1943274/2147480434/815-10-50-8A Reference 2: http://www.xbrl.org/2003/role/disclosureRef 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