Iconix to price $275 million five-year convertibles to yield 2.5%-3%, up 27.5%-32.5%

By Rebecca Melvin

New York, May 16 - Iconix Brand Group Inc. plans to price $275 million of five-year convertible senior subordinated notes Tuesday after the market close that were talked at a coupon of 2.5% to 3% and an initial conversion premium of 27.5% to 32.5, according to a syndicate source.

Barclays Capital Inc. and Goldman Sachs & Co. are the joint bookrunners of the Rule 144A offering, which has a $25 million greenshoe.

The notes are non-callable and have no puts. There is contingent conversion at a price hurdle of 130%.

Iconix plans to enter into privately negotiated convertible note hedge and warrant transactions in connection with the offering of notes.

In establishing initial hedges of the convertible note hedge transactions and warrant transactions, hedge counterparties and their affiliates expect to purchase Iconix common stock in open-market transactions and/or privately negotiated transactions and/or enter into cash-settled derivative transactions related to Iconix common stock.

Proceeds will be used to fund the cost of the convertible note hedge transaction with hedge counterparties, to prepay the outstanding balance under the company's term loan facility due Jan. 1, 2012, to make future repayment on existing 1.875% convertibles, which may be on or prior to the June 30, 2012 maturity date, and for general corporate purposes, which may include investing in or acquiring new brands through opportunistic mergers, stock or asset purchases and/or other strategic relationships.

Iconix is a New York-based brand management company.

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