PITTSBURGH, April 14, 2020 /PRNewswire/ -- DICK'S
Sporting Goods, Inc. (NYSE: DKS), a leading omni-channel sporting
goods retailer, today announced the pricing of its offering of
$500 million aggregate principal
amount of 3.25% convertible senior notes due 2025 (the "notes") in
a private offering only to persons reasonably believed to be
qualified institutional buyers pursuant to Rule 144A under the
Securities Act of 1933, as amended (the "Securities Act"). DICK'S
also granted the initial purchasers of the notes an option to
purchase, for settlement within a period of 13 days from, and
including, the date notes are first issued, up to an additional
$75 million aggregate principal
amount of notes in the private placement. The issuance and
sale of the notes is scheduled to settle on or about April 17, 2020, subject to customary closing
conditions.
The notes will be unsecured, unsubordinated obligations of
DICK'S and will accrue interest at a rate of 3.25% per annum,
payable semi-annually in arrears on April
15 and October 15 of each
year, beginning on October 15, 2020.
The notes will mature on April 15,
2025, unless earlier repurchased, redeemed or converted. The
notes will be convertible by the noteholders prior to the close of
business on the business day immediately preceding December 2, 2024 only under certain
circumstances and during certain periods, and irrespective of those
circumstances, will be convertible by the noteholders on or after
December 2, 2024 until the close
of business on the second scheduled trading day immediately
preceding April 15, 2025. The
initial conversion rate will be 28.2618 shares of DICK'S common
stock per $1,000 principal amount of
notes (equivalent to an initial conversion price of approximately
$35.38 per share of DICK'S common
stock, which represents a premium of approximately 35% over the
last reported sale of $26.21 per
share of DICK'S common stock on April 14,
2020), subject to adjustment in certain circumstances.
Upon conversion, the notes may be settled, at DICK'S election, in
cash, shares of DICK'S common stock or a combination of cash and
shares of DICK'S common stock.
The notes will also be redeemable, in whole or in part, for cash
at DICK'S option at any time, and from time to time, on or after
April 17, 2023 in certain
circumstances at a redemption price equal to the principal amount
of the notes to be redeemed, plus accrued and unpaid interest, if
any, to, but excluding, the redemption date. In addition, in
certain limited circumstances, noteholders may require DICK'S to
repurchase their notes for cash for a repurchase price equal to the
principal amount of the notes to be repurchased, plus accrued and
unpaid interest, if any, to, but excluding, the applicable
repurchase date.
DICK'S estimates that the net proceeds from the offering will be
approximately $486.5 million (or
approximately $559.6 million if the
initial purchasers fully exercise their option to purchase
additional notes), after deducting the initial purchasers'
discounts and commissions and estimated offering expenses. DICK'S
intends to use approximately $48.6
million of the net proceeds to fund the cost of entering
into the convertible note hedge transactions described below (after
such cost is partially offset by the proceeds from entering into
the warrant transactions described below) and the remainder of the
net proceeds from the offering for general corporate
purposes. If the initial purchasers exercise their option to
purchase additional notes, then DICK'S intends to use a portion of
the additional net proceeds to fund the cost of entering into
additional convertible note hedge transactions as described below
(after such cost is partially offset by the proceeds from entering
into the additional warrant transactions described below).
In connection with the pricing of the notes, DICK'S entered into
privately negotiated convertible note hedge transactions with one
or more of the initial purchasers or their respective affiliates or
other financial institutions (in this capacity, the "hedge
counterparties"). The convertible note hedge transactions cover,
subject to customary anti-dilution adjustments, the number of
shares of common stock that will initially underlie the notes sold
in this offering. DICK'S also entered into one or more separate,
privately negotiated warrant transactions with the hedge
counterparties collectively relating to the same number of shares
of DICK'S common stock, subject to customary anti-dilution
adjustments, and for which DICK'S will receive premiums to
partially offset the cost of entering into the hedge transactions.
If the initial purchasers exercise their option to purchase
additional notes from DICK'S, then DICK'S may enter into one or
more additional convertible note hedge transactions and one or more
additional warrant transactions with the hedge counterparties,
which, if executed, will initially cover, collectively, the number
of shares of DICK'S common stock that will initially underlie the
additional notes DICK'S sells to the initial purchasers.
The convertible note hedge transactions are intended to reduce
the potential dilution with respect to DICK'S common stock or
offset any potential cash payments DICK'S is required to make in
excess of the principal amount of converted notes, as the case may
be, upon any conversion of the notes. The warrant transactions
could have a dilutive effect with respect to DICK'S common stock to
the extent that the price per share of DICK'S common stock exceeds
the strike price of the warrants evidenced by the warrant
transactions. The strike price of the warrants will initially
be $52.42 per share, which represents
a premium of 100% over the per share closing price of DICK'S
common stock on April 14, 2020, and
is subject to certain adjustments under the terms of the warrant
transactions.
In connection with establishing their initial hedge positions
with respect to the convertible note hedge transactions and the
warrant transactions, DICK'S expects that the hedge counterparties
or their respective affiliates will enter into various cash-settled
over-the-counter derivative transactions with respect to DICK'S
common stock concurrently with, or shortly after, or purchase
shares of DICK'S common stock shortly after, the pricing of the
notes, and may unwind these cash-settled over-the-counter
derivative transactions and purchase shares of DICK'S common stock
in open market transactions shortly after the pricing of the notes.
These activities could increase, or prevent a decline in, the
market price of DICK'S common stock concurrently with, or shortly
after, the pricing of the notes.
In addition, DICK'S expects that the hedge counterparties or
their respective affiliates will modify their hedge positions with
respect to the convertible note hedge transactions and the warrant
transactions from time to time after the pricing of the notes, and
are likely to do so during any observation period, by purchasing or
selling shares of DICK'S common stock or the notes in privately
negotiated transactions or open market transactions or by entering
into or unwinding various over-the-counter derivative transactions
with respect to DICK'S common stock. Any of these activities could,
however, adversely affect the trading price of DICK'S common stock
and, consequently, the value of the consideration that noteholders
receive upon conversion of the notes, the trading price of the
notes or noteholders' ability to convert the notes.
The offer and sale of the notes and any shares of DICK'S common
stock issuable upon conversion of the notes have not been
registered under the Securities Act or any other applicable
securities laws. As a result, the notes and the shares of
DICK'S common stock, if any, issuable upon conversion of the notes
will be subject to restrictions on transferability and resale and
may not be offered, transferred or sold except in compliance with
the registration requirements of the Securities Act or pursuant to
an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act and any other
applicable securities laws.
This press release does not and will not constitute an offer to
sell, or the solicitation of an offer to buy, the notes, any shares
of DICK'S common stock issuable upon conversion of the notes, or
any other securities, nor will there be any sale of the notes or
any such shares or other securities, in any state or other
jurisdiction in which such offer, sale or solicitation would be
unlawful. Any offer will be made only by means of a private
offering memorandum.
About DICK'S
Founded in 1948, DICK'S Sporting Goods,
Inc. is a leading omni-channel sporting goods retailer offering an
extensive assortment of authentic, high-quality sports equipment,
apparel, footwear and accessories. As of February 1, 2020, DICK'S operated 726 DICK'S
Sporting Goods locations across the
United States, serving and inspiring athletes and outdoor
enthusiasts to achieve their personal best through a blend of
dedicated teammates, in-store services and unique specialty
shop-in-shops dedicated to Team Sports, Athletic Apparel, Golf,
Lodge/Outdoor, Fitness and Footwear.
Headquartered in Pittsburgh,
Pennsylvania, DICK'S also owns and operates Golf Galaxy and
Field & Stream specialty stores, as well as GameChanger, a
youth sports mobile app for scheduling, communications and live
scorekeeping. DICK'S offers its products through a content-rich
eCommerce platform that is integrated with its store network and
provides customers with the convenience and expertise of a 24-hour
storefront.
Forward-Looking Statements
This press release
includes forward-looking statements concerning DICK'S expectations,
anticipations, intentions, beliefs or strategies regarding the
future, including statements regarding the offering of the notes,
the anticipated terms of the notes being offered, the completion,
timing and size of the proposed offering, the intended use of the
proceeds and the anticipated terms of, and the effects of entering
into, the bond hedge and warrant transactions. Forward-looking
statements represent DICK'S current expectations regarding future
events and are subject to known and unknown risks and uncertainties
that could cause actual results to differ materially from those
implied by the forward-looking statements and there can be no
assurance that future developments affecting DICK'S will be those
that it has anticipated. Among those risks and uncertainties
are market conditions, including market interest rates, the trading
price and volatility of DICK'S common stock and risks relating to
DICK'S business, including the impact to consumer demand and supply
chain due to the spread of the coronavirus (COVID-19) and other
risks described in periodic reports that DICK'S files from time to
time with the Securities and Exchange Commission ("SEC").
DICK'S may not consummate the proposed offering described in this
press release and, if the proposed offering is consummated, cannot
provide any assurances regarding the final terms of the offer or
the notes or its ability to effectively apply the net proceeds as
described above.
For additional information on these and other factors that could
affect DICK'S actual results, see the risk factors set forth in
DICK'S filings with the SEC, including the most recent Annual
Report filed with the SEC on March 20,
2020 and the Current Report on Form 8-K filed with the SEC
on April 14, 2020. DICK'S
disclaims and does not undertake any obligation to update or revise
any forward-looking statement in this press release, except as
required by applicable law or regulation. Forward-looking
statements included in this release are made as of the date of this
release.
Contact Information
Investor Relations:
Nate Gilch, Senior Director of
Investor Relations
DICK'S Sporting Goods, Inc.
(724) 273-3400 or investors@dcsg.com
Media Relations:
(724) 273-5552 or press@dcsg.com
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SOURCE DICK'S Sporting Goods, Inc.