Chicago, April 13 – Guess?, Inc. will be issuing $275 million of 3.75% convertible notes due 2028 with an initial conversion premium of 30%, according to a press release.
A $161.4 million portion of the total issue size comes from separate, privately negotiated exchange and subscription agreements with a limited number of holders of the company’s 2% convertible senior notes due 2024 and certain other investors. The same holders are buying $113.6 million of the new notes.
The new notes will be convertible into cash, company shares or a combination of both at the company’s option.
The initial conversion rate will be approximately 40.4858 shares per $1,000 principal amount of the new notes, which is equivalent to an initial conversion price of approximately $24.70 per share, subject to adjustment.
Concurrently with the pricing of the new notes, Guess? will use a portion of the proceeds to fund the repurchase of $42.5 million of its common stock from purchasers of the new convertibles in privately negotiated transactions at a purchase price of $19 per share, which equals the stock’s closing sale price on April 12. These repurchases are expected to settle concurrently with the closing of the other transactions.
The company also expects to use $31.6 million of the proceeds from the private placement to pay the cost of the convertible note hedge transactions after such cost is partially offset by the proceeds from the sale of warrants. The warrant strike price is initially $41.80, which represents a 120% premium to the company’s closing stock price on April 12.
The remaining proceeds will be used for general corporate purposes.
Guess? is a Los Angeles-based designer, marketer and distributor of casual apparel and accessories.
| Issuer: | Guess?, Inc.
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| Amount: | $275 million
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| Issue: | Convertible senior notes
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| Maturity: | April 15, 2028
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| Coupon: | 3.75%
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| Conversion premium: | 30%
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| Conversion price: | $24.70
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| Conversion rate: | 40.4858
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| Announcement date: | April 13
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| Settlement date: | April 17
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| Distribution: | Exchange, private placement
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| Stock symbol: | NYSE: GES
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| Stock price: | $19.00 on April 12
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| Market capitalization: | $1.07 billion
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