Dick's Sporting Goods $125 million proceeds cash-to-zero convert talked at 2.25-2.75%, up 37.5-42.5%

Nashville, Feb. 10 - Dick's Sporting Goods Inc. launched $125 million in proceeds of 20-year discount cash-to-zero convertible notes with guidance for a cash coupon of 2.25% to 2.75% with a 37.5% to 42.5% initial conversion premium. It will pay a cash coupon for five years and then the bond will accrete at the cash coupon rate plus 25 basis points.

Merrill Lynch & Co. Inc. is sole bookrunner of the Rule 144A deal, which is set to price after Wednesday's close. Co-managers are UBS Investment Bank and Banc of America Securities.

The senior unsecured notes will be non-callable for five years with puts in years five, 10 and 15.

There is a 120% contingent conversion trigger.

Holders will have full dividend protection.

There is an $18.75 million proceeds greenshoe available.

The sporting goods retailer said it plans to use proceeds for the net cost of a convertible bond hedge in connection with the notes and separate warrant transaction. Remaining net proceeds will be used for general corporate purposes, such as investing in new stores, accelerating store growth and acquisitions.

In addition, the Pittsburgh-based retailer reported Tuesday that net sales for the fiscal fourth quarter ended Jan. 31 gained 20% to $474.4 million and comparable store sales rose 4.6%. As a result, the company boosted its guidance for the fiscal year to a range of $2.08 to $2.09 per diluted share from previous guidance for $1.99 to $2.00 per diluted share.

The company also announced a two-for-one stock split to be distributed on April 5 to holders of record at March 19, noting that the stock price escalated more than 160% in 2003 and was up more than 340% from its initial public offering price in October 2002.

Dick's Sporting Goods shares ended Tuesday up 55%, or 1.04%, to $53.58.

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