Morning Commentary: Iconix Brand Group jumps on new financing to repay 2.5% convertibles

By Rebecca Melvin

New York, March 7 – Iconix Brand Group Inc.’s two convertible bond issues jumped early Monday on news that the New York-based brand management company has obtained financing to repay the 2.5% convertibles that are due June 1, a New York-based trader said.

Iconix entered into a new five-year $300 million senior secured term loan credit facility provided by credit funds managed by affiliates of Fortress Investment Group LLC. The loan must be used to repay the convertibles.

The Iconix 1.5% convertibles due 2018 jumped about 9 points to 67 from 58.

The Iconix 2.5% convertibles due 2016 were up four or 5 points to 98.5 to 99, the trader said.

Iconix shares were up about $1.60, or 19%, to $10.00.

The new term loan will bear interest at Libor plus 1,000 basis points, payable quarterly with a 1.5% Libor floor. That is expected to result in $9 million of additional interest expense and amortization of financing fees from what was previously forecasted in the company’s guidance for the full-year 2016.

Updated guidance for 2016 will be provided when the company reports its fourth quarter, Iconix said in a news release.

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