Notes will convert at $1.84; warrants for 8,804,348 shares included
By Devika Patel
Knoxville, Tenn., March 21 - Wet Seal, Inc. said it negotiated a $27 million private placement of 6% convertible notes. Cowen and Co., LLC is the agent.
The three-year notes convert to class A common stock at $1.84 per share. The conversion price is a 5.14% premium to the March 20 closing share price of $1.75.
The investors also will receive warrants for 8,804,348 shares. The warrants are each exercisable at $2.12 until Sept. 27, 2019. The strike price is a 21.14% premium to the March 20 closing share price.
Settlement is expected March 26.
Proceeds will be used for general corporate purposes.
"This transaction enhances our capital structure at a time when our industry is challenged by a number of macro issues, most notably mall traffic and teen shopping patterns," chief executive officer John D. Goodman said in a press release.
"As we announced in our year-end earnings press release today, we are embarking on a strategic plan designed to restore comparable store sales growth, improve merchandise margins and strengthen our market position. We have a prudent capital spending plan for 2014 and will be deploying resources toward the significant opportunities we see to grow our e-commerce business, transform our real estate portfolio and expand our presence in the plus-size market. This new capital provides us with the financial flexibility to more effectively execute our strategies."
Wet Seal is a Foothill Ranch, Calif., clothing retailer.
| Issuer: | Wet Seal, Inc.
|
| Issue: | Convertible notes
|
| Amount: | $27 million
|
| Maturity: | March 2017
|
| Coupon: | 6%
|
| Conversion price: | $1.84
|
| Warrants: | For 8,804,348 shares
|
| Warrant expiration: | Sept. 27, 2019
|
| Warrant strike price: | $2.12
|
| Agent: | Cowen and Co., LLC
|
| Pricing date: | March 21
|
| Settlement date: | March 26
|
| Stock symbol: | Nasdaq: WTSL
|
| Stock price: | $1.75 at close March 20
|
| Market capitalization: | $127.08 million
|
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