Footwear maker Crocs Inc. (CROX), which has been struggling lately with dipping revenues, late Sunday announced that it will receive an investment of $200 million from private equity firm Blackstone Group (BX). Crocs also said it intends to revise its capital structure to accommodate a $350 million stock repurchase program approved by its board.
The company, well known for its colorful clogs, added that it now expects fourth-quarter revenue and loss per share to be at the lower end of the previous forecast. Further, John McCarvel announced his intention to retire as president, chief executive officer and board member on or about April 30, 2014. The company said its board has begun an outside search for McCarvel's replacement.
In its statement, the company said an investment fund affiliated with Blackstone has agreed to purchase $200 million of newly issued series A convertible preferred stock. The Preferred Stock will have a 6.0 percent cash dividend rate and is convertible into shares of common stock at a conversion price of $14.50 per share. Consummation of the investment is expected to close in January 2014, subject to the satisfaction of customary closing conditions.
The company added that Blackstone will now be entitled to two seats on the Crocs board of directors with its investment.
Crocs also said it will use the net proceeds of approximately $180 million from the Preferred Stock as well as excess cash to fund its repurchase plan.
In November, media reported citing people familiar with the matter that Crocs was considering a move, among other strategic options, to go private, and that it has had talks with a group of private equity firms, including Blackstone, to discuss options. The talks were expected to lead to alternatives to boost shareholder value, which might include a stake sale or joint venture.
For the fourth quarter, the company now expects revenue to be at the low end of the previously provided guidance range of $220 million to $225 million. On average, nine analysts polled by Thomson Reuters expect revenues of $222.25 million for the quarter. Analysts' estimates typically exclude special items.
For the quarter, loss per share is now projected to be at the low end of the previously given guidance range of $0.20 to $0.23, means higher loss. The forecast exclude aggregate charges in a range of $47 million to $52 million, which is an additional loss per share of $0.45 to $0.50.
While not currently estimable, the company expects that additional restructuring charges may be necessary in 2014 as it refine strategic plan.
Niwot, Colorado-based Crocs' revenues were hurting lately with declining demand of clogs in the Americas and Japan. For its fiscal third quarter, the company reported a 71 percent drop in profit hurt by sales decline and increased expenses.
Thomas Smach, Crocs chairman of the board, said, "As we look forward, 2014 will be a significant transition period for the company. We will recruit a new CEO who will work with the reconstituted board to refine our short-term and long-term strategic plans, which will include a sharper focus on earnings growth with less emphasis on top-line growth. We will focus on improving financial performance, particularly in the Americas and Japan, as well as enhancing our global retail execution."
Crocs shares closed Friday's trading at $13.33, up $0.03 or 0.23 percent.
by RTT Staff Writer
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