Guess? privately swaps more 2% convertible notes to extend maturity

By Mary Katherine Stinson

Lexington, Ky., Jan. 8 – Guess?, Inc. announced that it privately worked with a limited number of noteholders to retire about $67.1 million of its existing 2% convertible notes due 2024, according to a press release and an 8-K filing with the Securities and Exchange Commission.

The company privately negotiated with holders to exchange $67.1 million of existing notes for $64.8 million of new 3.75% convertible senior notes due April 15, 2028.

The 2028 notes will have the same terms as, and constitute a single series with, the $275 million aggregate principal amount of the 2028 notes that the company originally issued on April 17, 2023.

After the exchange, there will be about $48.1 million of the 2024 notes and about $339.8 million of the 2028 notes outstanding.

In connection with the exchange and subscription offering, the company entered a share repurchase agreement, whereby the company will repurchase 915,467 of its outstanding shares of common stock for about $21.1 million of cash, at a price per share of $23.05, the stock’s closing pricing on Jan. 5.

In connection with the pricing of the 2028 notes, the company entered into convertible note hedge and warrant transactions with a financial institution. The strike price of the warrant transactions will initially be $41.37 per share, and is subject to certain adjustments under the terms of the warrant transactions.

In connection with the exchange transactions, the company expects that holders of existing convertible notes that participate in the exchange transactions will seek to sell the company’s common stock and/or enter into various derivative positions with respect to the company’s common stock to establish hedge positions with respect to the new convertible notes.

Guess? also intends to unwind convertible note hedge and warrant transactions, the existing call spread transactions, in connection with the existing convertible notes.

The conversion rate of the 2028 notes is about 40.9077 shares per $1,000 principal amount of the notes, which is equivalent to an initial conversion price of about $24.45 per share of common stock, and is subject to adjustment upon the occurrence of certain events. The 2028 notes will be convertible only upon the occurrence of certain events and during certain periods.

The transactions are expected to settle on or about Jan. 10.

Guess? is a Los Angeles-based designer, marketer and distributor of casual apparel and accessories.

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