Dick’s Sporting Goods, Inc. has called all of its outstanding 3.25 percent Convertible Senior Notes due 2025 for redemption on April 18, 2023.
The aggregate principal amount of the Notes being redeemed is $59,127,000, which is equal to the current aggregate principal amount of Notes outstanding. The redemption price will be equal to 100 percent of the principal amount of each Note called for redemption, payable in cash, plus accrued and unpaid interest on such Note too, but excluding, the Redemption Date for such Note.
To receive payment of the Redemption Price, any certificated Notes must be surrendered to U.S. Bank Trust Company, National Association, as the paying agent and the conversion agent, at U.S. Bank Global Corporate Trust, 111 Fillmore Avenue East, St. Paul, MN 55107, on or prior to the Redemption Date.
Notes called for redemption may be converted at any time before the close of business on April 17, 2023, which is the business day immediately before the Redemption Date, or if Dick’s fails to pay the Redemption Price due on the Redemption Date in full, at any time until such time as Dick’s pays such Redemption Price in full.
The sending of the notice of redemption is a make-whole fundamental change under the indenture governing the Notes, and therefore the current conversion rate has been increased for all conversions of Notes after today and before the Redemption Date by 0.1443 shares. As of today, the conversion rate, including the additional shares, for all conversions of Notes after today and before the Redemption Date is 31.2358 shares of common stock of Dick’s per $1,000 principal amount of Notes. This conversion rate will remain subject to adjustment in accordance with the indenture from time to time for certain events.
All conversions of Notes on or after today and before the Redemption Date will be settled by delivering shares of common stock of Dick’s and paying cash in lieu of fractional shares, as applicable, upon such conversions.
The company also intends to enter into complete unwind agreements with a financial institution relating to the remaining portions of the convertible note hedge transaction and warrant transaction that were previously entered into in connection with the issuance of the Notes. Under such unwind agreements, the financial institution would deliver to the company a number of shares of the company’s common stock in respect of the remaining portions of the transactions being early terminated.
The company intends to offset the dilutive impact of anticipated conversions of the Notes immediately prior to the redemption through the shares received from the convertible note hedge and shares repurchased by the company.
Following the redemption, the company’s annual interest payments will be reduced by approximately $1.9 million.
