Iconix greenshoe lifts 2.5% convertibles due 2016 to $300 million

By Melissa Kory

Cleveland, May 23 - Iconix Brand Group, Inc. said that underwriters exercised their $25 million over-allotment option, lifting its offering of 2.5% senior subordinated convertible notes due June 1, 2016 to $300 million.

Iconix priced $275 million of the five-year convertibles after the market close May 17 at par to yield 2.5% with an initial conversion premium of 32.5%.

Barclays Capital Inc. and Goldman Sachs & Co. were the joint bookrunners of the deal.

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

Iconix entered into privately negotiated convertible note hedge and warrant transactions in connection with the offering of notes. The strike price of the warrant transactions will initially be $40.6175, which boosts the effective premium from the issuer's perspective to 75%.

Prior to March 1, 2016, the notes are convertible upon the occurrence of certain events and during certain periods, and thereafter, at any time until the business day preceding the maturity date of the notes.

The notes are convertible at an initial conversion rate of 32.5169 shares of Iconix common stock per $1,000 principal amount of the notes, or a conversion price of $30.75.

The proceeds were used to fund the cost of the convertible note hedge transaction with hedge counterparties. Iconix expects to use the remainder of proceeds to prepay the outstanding balance under the company's term loan facility due Jan. 1, 2012, to make future repayment on Iconix's existing senior subordinated convertible notes, 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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