Crocs buys back half its Blackstone shares

NIWOT — Crocs Inc. (Nasdaq: CROX) based in Niwot will buy back half of the shares that Blackstone Capital Partners VI L.P. acquired in 2014.

The preferred shares were acquired in a $200 million investment by Blackstone. The buyback will be valued at $183.7 million.

The Blackstone shares carried a cumulative dividend payable in cash at a rate of 6 percent per year and received an allocation of net income in any fiscal quarter in which there were positive earnings, according to a statement from Crocs to investors.
Half the shares represent about 6.9 million common shares at $26.64 per share. Crocs stock was trading at $15 per share at the time of the agreement but is currently at $27.80 per share.

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Blackstone will immediately convert its remaining preferred shares into approximately 6.9 million shares of the company’s common stock and has agreed not to sell or transfer those shares to a third party for approximately nine months, Crocs statement said. As part of the agreement, the company will pay Blackstone a one-time additional payment of $15 million and Blackstone’s right to appoint future directors will be reduced from two to one.

“We believe this transaction is extremely positive for the company and our stockholders,” said Anne Mehlman, executive vice president and chief financial officer, in a written statement. “Elimination of the preferred share dividend and the preferred share income allocation increases our 2018 year to date pro forma EPS by approximately $0.18 or 30 percent. By repurchasing 50 percent of the preferred shares, we have eliminated the significant overhang on our common stock, and we did so in a single transaction absent the price uncertainty and volume limitations associated with open market purchases. Additionally, the lock-up agreement covering the newly issued common stock illustrates Blackstone’s continued confidence in our strategy and future business prospects,” she said.
“In the years following Blackstone’s investment, the company has materially strengthened its brand, improved its operations and returned to growth, and we appreciate the support Blackstone has provided all along the way as one of our largest stockholders,” said Andrew Rees, president and CEO.
The transaction will be financed using cash on hand with the balance coming from the company’s senior revolving credit facility. In connection with the transaction, the credit facility was increased to $250 million, with similar terms.