- Guess? intends to initiate an accelerated share repurchase program
of
$150 million or more and up to$50 million of open-market and/or privately negotiated share repurchases concurrent with the offering of the notes, all dependent on final pricing terms of the notes and related transactions - Guess? expects to reduce its quarterly cash dividend from
$0.225 to$0.1125 per share in order to redeploy capital and return incremental value to shareholders through share repurchases - Guess? intends to enter into bond hedge and warrant transactions with a warrant strike price expected to be not less than a 100% premium to the Company’s stock price at the time of pricing of the notes, which are generally intended to limit potential dilution from the offering
- Guess? intends to settle conversions in cash up to the principal amount and in shares for any excess
- The
$250 million offering may be expanded if a greenshoe option is exercised by the initial purchaser to increase the transaction size by up to 15% or an incremental$37.5 million
Overview
The Company announced that it intends to use substantially all of the
net proceeds from the offering of the Notes, after effecting the
convertible note hedge transactions described below, to effect share
repurchases. The Company announced that it intends to purchase
approximately
Additionally, the Company announced that it expects to reduce its
quarterly cash dividend from
The Company also announced that it intends to enter into certain bond hedge and warrant transactions, which are generally intended to limit the potential dilution from the offering of the Notes. See “Certain Concurrent Transactions” below.
Expected 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, interest rate and certain other terms of the Notes will
be determined at the time of the pricing of the offering. The Notes will
pay interest semi-annually in arrears on
Expected Use of Proceeds of the Offering of Notes
Share Repurchases
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 at least
Such repurchase transactions are expected to be effected (i)
concurrently with the pricing of the Notes, by repurchases from
purchasers of the Notes in privately negotiated transactions through the
initial purchaser or its affiliate, as the Company’s agent, for
settlement concurrently with the closing of the Notes offering (or, in
lieu of effecting a portion of such privately negotiated repurchases,
the Company may use the offering proceeds that would have been used to
settle such portions of such privately negotiated repurchases to offset
cash on hand spent to repurchase shares in the open market as described
above); and (ii) shortly following the closing of the offering, through
an accelerated share repurchase program (the “ASR”) and in any open
market or other transactions from time to time in the future, each
pursuant to the Company’s previously announced
After effectuating the convertible note hedge transactions described below, the Company expects to use substantially all of the remaining net proceeds from the offering of the Notes to repurchase shares of its common stock, including through the ASR and in privately negotiated, open market or other transactions from time to time. The Company intends to use any remaining net proceeds from the offering of the Notes, if any, for 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.
Concurrent Transactions
The Company also expects to use a portion of the net proceeds from the offering of the Notes 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).
Other Matters
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 also announced today that its 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, from
Certain Concurrent Transactions
In connection with the pricing of the Notes, the Company also intends to enter into convertible note hedge and warrant transactions with the initial purchaser or its affiliates and/or other financial institutions (the “hedge counterparties”). The convertible note hedge transactions will cover the number of shares of common stock that will initially underlie 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 will relate to the same number of shares of common stock as underlies the Notes, subject to customary anti-dilution adjustments. The warrant transactions could separately have a dilutive effect with respect to the Company’s common stock to the extent that the market price per share of the common stock exceeds the strike price of the warrants. If the initial purchaser exercises its over-allotment option, the Company may enter into additional convertible note hedge and warrant transactions in corresponding amounts.
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.
Other Matters
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 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
About
View source version on businesswire.com: https://www.businesswire.com/news/home/20190422005501/en/
Source:
Guess?, Inc.
Fabrice Benarouche
VP, Finance and Investor
Relations
(213) 765-5578