Iconix receives loan to pay off debt

New York - The news of how Iconix Brand Group, Inc. has been struggling reared its ugly head last week when Badgley Mischka purchased their trademark back from them . The company has found itself straddled with debt, and even in potential legal trouble since they have been asked to restate their earnings over the past several years. In August 2015, their CEO Neil Cole abruptly left.

Now, there is a glimmer of hope for the brand as of this morning when it was announced that Fortress Investment Group has agreed to lend them 300 million dollars to pay off their notes that are due in June.

Iconix was planning on refinancing the 2.5 percent convertible senior subordinated notes that were due in June. If they didn't refinance, the company would have had to come up with 300 million dollars to pay the note holders, which seemed virtually impossible for them. Several weeks ago, Iconix said that they were on track to refinance the convertible notes, but now they will move forward with the option of the loan given to them by Fortress.

Despite the saving grace that is the loan, it does come with a sizable price tag. Iconix is expected to pay 9 million dollars in interest and amortization fees from what was originally forecast during their guidance for 2016. On May 11, Iconix will update their guidance when they report their fourth quarter earnings.

“We are pleased to have successfully secured this new capital, which shows the confidence that Fortress has in our underlying business,” said Dave Jones, chief financial officer of Iconix to WWD, “With the refinancing path for the 2016 converts now in place, we look forward to a continued focus on our core business, including the growth of our worldwide brand management platform.”

The five-year term loan will bear interest at LIBOR+10 percent per annum, payable quarterly with a 1.5 percent floor on LIBOR.

This news brings hope for further financial recovery for Iconix. Over the past year, their shares have fallen over 74 percent, but in the past month their shares have recovered 54 percent from a year low of 4 dollars and 67 cents.

photo:bidnessetc.com