Guess aims to manage debt with new convertible note terms

Los Angeles – Guess? The Company (NYSE: GES) announced the exchange of approximately $67.1 million principal amount of 2.00% convertible senior notes due 2024 for approximately $64.8 million principal amount of 2.00% convertible senior notes due 2024. %, convertible senior notes due 2028. The deal, which is expected to close around January 10, 2024, is part of the company’s broader strategy to manage debt.

The new 2028 notes will be similar to the existing 2028 notes issued by Guess in April 2023, with the same terms and CUSIP numbers, allowing them to be interchangeable and interchangeable. The conversion rate for the 2028 Notes is approximately 40.9077 shares per $1,000 principal amount, which represents an initial conversion price of approximately $24.45 per share.

Guess also plans to repurchase 915,467 shares of common stock, valued at approximately $21.1 million, as part of exchange-consistent stock repurchases. The repurchase price per share will match the stock’s closing price of $23.05 on January 5, 2024.

Concurrent with the exchange of notes, Guess entered into bond and warrant hedging transactions. They are designed to reduce potential dilution from the convertible notes and offset any cash payments required upon conversion of the notes. The warrant transaction has an exercise price of $41.37 per share and could have a dilutive effect if the company’s share price exceeds that threshold.

The company expects to fund these strategic initiatives using cash on hand as well as proceeds from the unwinding of the hedge transactions and related warrants under the 2024 notes. The transactions are expected to generally limit dilution to the company’s common stock upon conversion of the 2028 notes.

In connection with the 2024 bond issuance, Guess previously entered into hedging and warrant transactions, some of which were terminated in April 2023. The remaining transactions are expected to be terminated based on the 2024 note exchange amount.

The Company has clarified that the 2028 Notes and any shares of common stock issuable upon conversion will not be registered under the Securities Act or any state securities laws and may not be offered, sold or sold absent registration or an exemption from registration requirements.

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