To reflect the additional shares issued in this transaction, financing fees and interest savings, the company said Monday that it is revising down its 2016 GAAP diluted earnings per share guidance by 4 cents, to a range of 71 cents to 86 cents. Its non-GAAP diluted EPS guidance is being reduced by 9 cents, to a range of $1.06 to $1.21.
Iconix said it entered into separate, privately negotiated exchange agreements with certain holders of $105 million in principal amount of the company’s outstanding 1.5 percent convertible senior subordinated bonds, due March 2018. (Prior to these transactions, the principal amount of the notes outstanding was $400 million.)
The holders will receive cash payments of up to $35.2 million and about 6.8 million shares of Iconix common stock in exchange for the notes.
“We are very pleased to have negotiated the opportunistic repurchase of a portion of our outstanding convertible notes at what we believe to be an attractive discount,” Iconix CFO Dave Jones said in a statement. “Given the repurchase price of the notes, we were able to retire a future debt obligation for significantly less than its face amount. This debt reduction, combined with the issuance of equity, allows us to enhance our financial flexibility and fulfills one of our principal goals of proactively reducing our leverage over time.”
As of 11:55 a.m. ET, Iconix share price dipped about 4.5 percent, to $7.36.
Iconix owns and manages a range of fashion, lifestyle and entertainment brands, including Umbro, Material Girl and Candie’s.