Eddie Bauer Holdings Inc announced that it has priced a private offering of $75.0 million aggregate principal amount of 5.25% convertible senior notes due 2014. Eddie Bauer expects that the closing of the note offering will occur on or about April 4, 2007, subject to satisfaction of the applicable closing conditions.
The notes will pay interest semiannually beginning on October 1, 2007. The notes will be convertible upon the occurrence of specified events into cash, shares of Eddie Bauer common stock or a combination of cash and shares of Eddie Bauer common stock, at an initial conversion rate of 73.8007 shares per $1,000 principal amount of notes (an initial conversion price of approximately $13.55 per share).
The initial conversion price represents a 25 percent premium to the $10.84 per share closing price of Eddie Bauer's common stock on the NASDAQ Global Market on March 29, 2007. Prior to the expiration of the ownership limitations currently contained in Eddie Bauer's certificate of incorporation, Eddie Bauer must pay cash in settlement of any converted notes.
The notes will be guaranteed by certain of Eddie Bauer's domestic subsidiaries, including its primary operating subsidiary Eddie Bauer Inc. The notes will not be callable at the option of Eddie Bauer but holders will have the right to require Eddie Bauer repurchase their notes at a price equal to par plus accrued and unpaid interest in the event of certain fundamental changes including certain change of control transactions.
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