Q1 2021 Guess Earnings Conference Call
06.10.20 08:00 AM EDT
The Company intends to use substantially all of the net proceeds from
the offering of the Notes, or approximately
Additionally, the Company expects to reduce its quarterly cash dividend
The Company also announced that it entered into certain bond hedge and warrant transactions, which are generally intended to limit the potential dilution from the offering of the Notes. See “Concurrent Transactions” below.
Terms of the Notes
The 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 Notes
will be unsecured senior obligations of the Company. The initial
conversion rate of the Notes will be approximately 38.79 shares per
Expected Use of Proceeds of the Offering of Notes
After effectuating the convertible note hedge transactions described
below, the Company intends to use substantially all of the remaining net
proceeds from the Notes offering to repurchase shares of its common
stock pursuant to its previously announced
Concurrently with the pricing of the Notes, the Company repurchased
The Company intends to repurchase approximately
Shortly following the closing of the Notes offering, the Company intends
The Company intends to use the remaining net proceeds from the offering of the Notes, if any, for additional share repurchases and general corporate purposes, including, but not limited to, repayment of indebtedness and for working capital, provided that the Company has not designated any specific uses and has no current agreements or commitments with respect to any material acquisition or strategic transaction. Pending any specific application, the Company may invest the remaining net proceeds from the offering of the Notes in short- and long-term marketable securities.
In connection with the ASR, the Company has been advised that the ASR counterparty expects to purchase shares of the Company’s common stock in secondary market transactions and/or execute other transactions in the Company’s common stock, or in derivative transactions relating to the Company’s common stock, during the term of the ASR.
The purchase price per share of the common stock repurchased through the ASR will generally be equal to the average volume-weighted average price of the Company’s common stock during the term of the ASR. The exact number of shares repurchased pursuant to the ASR will be determined based on such purchase price. Any such share repurchases may increase, or prevent a decrease in, the market price of the Company’s common stock or the Notes.
The Company also expects to use approximately
These activities and the Company’s repurchases of shares of its common stock may cause or avoid an increase or a decrease in the market price of the Company’s common stock or the Notes, which could affect the ability of holders to convert the Notes, and, to the extent the activity occurs during any observation period related to a conversion of Notes, it could affect the amount and value of the consideration that the holders will receive upon conversion of the Notes.
Intention to Reduce Future Quarterly Cash Dividend
The Company’s Board of Directors intends to reduce future quarterly cash
dividends that may be paid to holders of the Company’s common stock,
when, as and if any such dividend is declared by the Board of Directors,
Certain Concurrent Transactions
In connection with the pricing of the Notes, the Company entered into
convertible note hedge and warrant transactions with certain financial
institutions (the “hedge counterparties”). The convertible note hedge
transactions covered the number of shares of common stock that initially
underlies the Notes, subject to anti-dilution adjustments substantially
similar to those applicable to the Notes, and are expected to generally
reduce the potential dilution with respect to the Company’s common stock
upon conversion of the Notes and/or to offset any cash payments the
Company is required to make in excess of the principal amount of
converted Notes, as the case may be. The warrants relate to the same
number of shares of common stock as underlies the 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 counterparties or their 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 Notes. These activities could result in an increase, or prevent a decrease in, the market price of the common stock or the Notes.
In addition, the hedge counterparties or their 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 Notes and prior to the maturity of the Notes (and are likely to do so during any observation period related to a conversion of 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 Notes, which could affect the ability of holders to convert the Notes, and, to the extent the activity occurs during any observation period related to a conversion of Notes, could affect the number of shares and value of the consideration that holders receive upon conversion of the Notes.
The offer and sale of the Notes and the issuance of shares of common
stock, if any, issuable upon conversion of the Notes have not been and
will not be registered under the Securities Act or the securities laws
of any other jurisdiction, and the 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. All statements, other than statements of historical facts, including all statements regarding the proposed offering of the Notes, the other transactions described in this press release, the anticipated closing of the sale of the Notes, and the anticipated use of proceeds, including the proposed share repurchases, 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
VP, Finance and Investor Relations