Iconix Prices $275M Senior Notes

Zacks

Clothing brand licensing company Iconix Brand Group Inc. (ICON) recently announced the pricing of senior notes aggregating $275 million. The notes were issued by Iconix’s subsidiaries in a private offering under its existing securitization program. This offering is just an extension of the company’s $250 million offering announced last week.

These notes carry an interest rate of 4.352% and will mature in 2020. Interest payments will start from Jul 25 and will be paid quarterly. The notes offering will be closed on Jun 21 and Iconix expects net proceeds from the note offering to be approximately $265 million.

Iconix’s subsidiaries will transfer the net proceeds from the notes offering to Iconix and the company will in turn use it for general corporate purposes, share repurchases, redemption of securities, acquisitions, working capital needs and capital expenditures.

Notably, in the last six months, Iconix has been aggressively acquiring brands and entering into joint ventures to strengthen its portfolio. Most recently in May 2013, Iconix acquired the remaining 49% interest in IP Holdings Unltd LLC ("IPHU") that manufactures and markets fashion and lifestyle products in the U.S. and internationally. Iconix now owns brands such as Ecko Unltd. and Marc Ecko Cut & Sew. Iconix had previously acquired a 51% stake in IP Holdings Unltd LLC in 2009.

In late-Feb 2013, Iconix acquired the renowned lifestyle brand Lee Cooper for $72 million in cash through the company's Luxembourg subsidiary, Iconix Luxembourg Holdings Sarl and strengthened its portfolio, Earlier in the same month, Iconix formed a joint venture with Buffalo International ULC to acquire a 51% interest in the latter’s Buffalo David Bitton brand for $76.5 million in cash. In early-Dec 2012, Iconix acquired the renowned football brand Umbro from Nike, Inc. (NKE) in order to further strengthen its portfolio with an iconic brand.

We remain impressed with Iconix’s strategic acquisitions and consistent expansion of licensing agreements. Iconix expects to explore additional opportunities and enhance its portfolio with more iconic brands in the upcoming quarters. Iconix expects to deliver over 20% revenue and earnings per share growth for 2013.

Iconix holds a Zacks Rank #1 (Strong Buy). Other stocks in the consumer discretionary sector that are performing well and are therefore worth considering include Hanesbrands Inc (HBI) which holds a Zacks Rank #1 (Strong Buy) and Joe’s Jeans Inc (JOEZ) which carries a Zacks Rank #2 (Buy).

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