Guess? privately swaps $14.6 million more 2% convertible notes

By Mary Katherine Stinson

Lexington, Ky., April 1 – Guess?, Inc. announced that it privately negotiated with one noteholder to retire about $14.6 million more 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 the holder to exchange $14.6 million of existing notes for about $12.1 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 3.75% convertible senior notes due 2028 originally issued on April 17, 2023 and the $64.8 million aggregate principal amount issued on Jan. 10.

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 and is subject to adjustment upon the occurrence of certain events. The 2028 notes are only convertible upon the occurrence of certain events.

After the transactions, the aggregate principal amount of the 2024 notes outstanding will be approximately $33.5 million, and the aggregate principal amount of the 2028 notes outstanding will be approximately $351.9 million.

In connection with the exchange, the company entered a share repurchase agreement, whereby the company will repurchase 326,429 of its outstanding shares of common stock from the holder who is exchanging their 2024 notes at a cash price of approximately $10.3 million. The purchase price equals the closing sale price of the company’s common stock on March 28, which was $31.47 per share.

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.

The company also authorized a stock repurchase program for up to $200 million of its common stock from time to time and as market and business conditions warrant.

The transactions are expected to settle on or about April 2.

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

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