Blackstone to pump $200 mn into Crocs
30 Dec 2013
Blackstone Group LP is investing $200 million in the Colorado-based footwear major Crocs Inc in the form of a preferred stock investment.
As per Crocs' chief financial officer Jeff Lasher, this deal will give the private-equity firm a 13-per cent stake in Crocs and two seats on its board. He also added that the preferred shares can be converted in to common stock in three years if the company's shares rise to a certain level.
With existing cash and Blackstone's fund, Crocs plans $350 million stock repurchase which is expected to begin in the first quarter, he added. That transaction would retire about 30 per cent of Crocs's shares outstanding.
The preferred stock will have a 6.0 per cent cash dividend rate and is convertible into shares of common stock at a conversion price of $14.50 per share. This conversion price represents a 9 per cent premium to the closing price of $13.33 per share on December 27, 2013, and a 10 per cent premium to the 30-day average closing price of $13.19 per share.
John McCarvel, Crocs' president, chief executive officer and board member also announced his intention to retire on or about April 30, 2014.
"It has been an honor to be part of the Crocs global team for the past decade and to lead it since 2010," McCarvel said.
The board has begun an outside search for McCarvel's replacement.
Thomas J Smach, Crocs chairman of the board said that as they look forward, 2014 will be a significant transition period for the company like recruiting a new CEO who will work with the reconstituted board to refine short-term and long-term strategic plans, which will include a sharper focus on earnings growth with less emphasis on top-line growth.
Crocs also updated its fourth quarter 2013 outlook, and expects revenue to be at the low end of the previously provided guidance range of $220 million and $225 million.
Established in 2002, Crocs sells its shoes, made out of a proprietary closed-cell resin it calls Croslite and which are offered in more than 300 four-season footwear styles in some 125 countries, according to its website.
After launching it in 2002, with their bright colours and unusual design, Crocs's clogs skyrocketed in popularity.
