The additional convertible senior notes due 2028 issued in exchange for our existing convertible senior notes due 2024 will augment the exchange and subscription transactions completed by Guess in
Guess has entered into bond hedge and warrant transactions with a warrant strike price of
$41.37per share, which are generally intended to limit potential dilution from the private placement transaction
Guess intends to retire approximately
$67.1 millionof the existing convertible senior notes due in 2024 pursuant to the exchange, and to use cash on hand, together with proceeds from the termination and unwinding of the related convertible note hedge and warrant transactions entered into in connection with the issuance of the existing convertible senior notes due 2024, to repurchase 915,467 shares of its common stock for approximately $21.1 millionand to enter into the bond hedge and warrant transactions
The 2028 Notes will have the same terms as, and constitute a single series with, the
The 2028 Notes will be convertible in certain circumstances into cash, shares of the Company’s common stock or a combination of cash and shares of common stock, at the Company’s election. If and when issued, the 2028 Notes will be unsecured senior obligations of the Company. The conversion rate of the 2028 Notes is approximately 40.9077 shares per
Concurrently with the pricing of the 2028 Notes, the Company agreed to repurchase 915,467 shares of its common stock for approximately
The Company expects to use cash on hand together with the proceeds from the termination and unwinding of the related convertible note hedge and warrant transactions that the Company entered into in connection with the issuance of the 2024 Notes (as described below) to pay the cost of the convertible note hedge transactions described below (after such cost is partially offset by the proceeds from the sale of warrants pursuant to the warrant transactions described below). These transactions are generally intended to reduce dilution on the 2028 Notes. The warrant strike price is initially
Certain Concurrent Transactions
In connection with the pricing of the 2028 Notes, the Company entered into convertible note hedge and warrant transactions with a financial institution (the “hedge counterparty”). The convertible note hedge transactions covered the number of shares of common stock that initially underlies the 2028 Notes, subject to anti-dilution adjustments substantially similar to those applicable to the Existing 2028 Notes, and are expected to generally reduce the potential dilution with respect to the Company’s common stock upon conversion of the 2028 Notes and/or to offset any cash payments the Company is required to make in excess of the principal amount of converted 2028 Notes, as the case may be. The warrants relate to the same number of shares of common stock as underlies the 2028 Notes, subject to customary anti-dilution adjustments. The strike price of the warrant transactions will initially be
The Company has been advised that, in connection with establishing their initial hedge positions with respect to the convertible note hedge and warrant transactions, the hedge counterparty or its respective affiliates expect to purchase shares of the common stock and/or enter into various derivative transactions with respect to the Company’s common stock concurrently with, or shortly after, the pricing of the 2028 Notes. These activities could result in an increase, or prevent a decrease in, the market price of the common stock or the 2028 Notes.
In addition, the hedge counterparty or its respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to the Company’s common stock and/or purchasing or selling common stock or other securities of the Company in secondary market transactions following the pricing of the 2028 Notes and prior to the maturity of the 2028 Notes (and are likely to do so during any observation period related to a conversion of 2028 Notes). This activity could also cause or avoid an increase or a decrease in the market price of the Company’s common stock or the 2028 Notes, which could affect the ability of holders to convert the 2028 Notes, and, to the extent the activity occurs during any observation period related to a conversion of 2028 Notes, could affect the number of shares and value of the consideration that holders receive upon conversion of the 2028 Notes.
In connection with the Transactions, the Company expects that the holders of 2024 Notes that participate in the 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 2028 Notes. This activity could decrease (or reduce the size of any increase in) the market price of the Company’s common stock, the 2024 Notes or the 2028 Notes at that time. Additionally, the Share Repurchase Transactions could increase (or reduce the size of any decrease in), the market price of the Company’s common stock, the 2024 Notes or the 2028 Notes at that time.
In connection with issuing the 2024 Notes, the Company entered into convertible note hedge and warrant transactions (the “2024 Call Spread Transactions”) with a financial institution, a portion of which 2024 Call Spread Transactions were terminated in
In connection with the Transactions, the Company and certain of its subsidiaries also amended their amended and restated senior secured asset-based revolving credit facility with
The offer and sale of the 2028 Notes and the issuance of shares of common stock, if any, issuable upon conversion of the 2028 Notes have not been and will not be registered under the Securities Act or the securities laws of any other jurisdiction, and the 2028 Notes and such shares may not be offered or sold in
This press release does not and shall not constitute an offer to sell nor the solicitation of an offer to buy any securities of the Company, nor shall there be any sale of any such securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful.
Notice Regarding Forward-Looking Statements
This press release includes certain forward-looking statements related to the Company within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements, which are frequently indicated by terms such as “expect,” “continue,” “remain,” “look,” “path” and similar terms, are only expectations, and involve known and unknown risks and uncertainties, which may cause actual results in future periods to differ materially from what is currently anticipated. All statements, other than statements of historical facts, including all statements regarding the Transactions, the anticipated closing of the Transactions, the anticipated sources and use of proceeds, the Share Repurchase Transactions and the effects of entering into the convertible note hedge and warrant transactions are forward-looking statements. These statements are based on management’s current estimates, assumptions, expectations or beliefs and are subject to uncertainty and changes in circumstances. These forward-looking statements are estimates reflecting the judgment of the Company’s senior management, and actual results may vary materially from those expressed or implied by the forward-looking statements herein.
The statements in this press release are made as of the date of this press release. The Company undertakes no obligation to update information contained in this press release, except as may be required by law. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law. For further information regarding risks and uncertainties associated with the Company’s businesses, please refer to the section entitled “Risk Factors” in the Company’s
About Guess?, Inc.
Guess?, Inc. designs, markets, distributes and licenses a lifestyle collection of contemporary apparel, denim, handbags, watches, eyewear, footwear and other related consumer products. Guess? products are distributed through branded Guess? stores as well as better department and specialty stores around the world. As of
Senior Vice President of Finance and Investor Relations and
Chief Accounting Officer
Source: Guess?, Inc.