Iconix increases exchange of convertibles to $125 million

New York, Feb. 16 – Iconix Brand Group, Inc. said it has increased the size of its exchange for its 1.5% convertible notes due March 2018 to $125 million from the previously disclosed size of $110 million.

The company has entered into additional agreements with holders of the convertibles since the previous announcement on Feb. 12, according to a news release.

Settlement is planned for Feb. 22.

As stated earlier, the company expects to issue new 5.75% senior subordinated convertible notes due August 2023 plus cash for accrued interest in exchange for the existing notes.

Iconix will set the conversion premium on the new convertibles at 17.5% above the volume-weighted average prices for the five-trading day period beginning on Feb. 12.

The exchange will satisfy the condition to the availability of the second delayed-draw term loan under the senior credit facility that the company achieve a reduction in the outstanding principal amount of the 2018 convertibles of at least $100 million.

In the exchange, the convertibles will be swapped out at an exchange ratio of par per $1,000 principal amount.

When it announced the exchange, Iconix said it may enter into agreements with one or more holders of the convertibles to increase the participation amount in the exchange to up to $125 million from $110 million.

The new convertibles will be secured by the same assets that secure the obligations of the company's wholly owned direct subsidiary IBG Borrower LLC under its senior secured credit facility.

The convertibles will be contractually subordinated in right of payment to the company’s obligations as a guarantor under the senior credit facility.

Conversions of the new notes will be subject to a make-whole payment by the company. The new notes will be convertible at any time by the holders and under certain circumstances by the company. In addition, the company will have the right to repurchase the convertibles at par after one year.

The company said the exchange also should be able to satisfy the remaining conditions to disbursement of the second delayed-draw term loan, allowing it to access the additional funds under the second delayed-draw term loan to retire the 2018 convertible notes that will remain outstanding after the exchange at their maturity.

The remaining conditions consist of the company being in financial covenant compliance under the existing senior credit facility, on a pro forma basis as of the time of the requested borrowing and on a projected basis for the succeeding 12 months based on projections reasonably acceptable to the lenders; and also no existence of a default or event of default under the senior credit facility.

Guggenheim Securities, LLC is the financial adviser for the exchange.

Iconix is a New York-based owner, licenser and marketer of consumer brands.

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