Big Dog Holdings, Inc. has entered into definitive agreements to sell $18.5 million of 8.375% Convertible Notes due 2012. The Notes are convertible into shares of common stock at a price of $18.00 per share. The securities are being sold to accredited institutional investors ($15.5 million) and management ($3 million). The parties expect to close the transaction shortly. Thomas Weisel Partners LLC and Wells Fargo Securities LLC served as placement agents for the transaction.
If the notes are fully converted, that would result in the issuance of 1,027,777 shares of common stock at $18.00 per share, a $2.05 premium to the closing price of the common stock on Monday, April 2, 2007. The notes are eligible for net share settlement at the Company's discretion which would reduce the dilutive effect. The proceeds of the financing will be used to pay down the Company's credit facility which in turn will give the Company more flexibility for growth and working capital needs.
Andrew Feshbach, CEO, said, “We are raising capital at this time to fund our Walking Company growth strategy. The Company is on track to open 40 new Walking Company stores in 2007. Our existing TWC stores, acquisition stores and new stores are all performing strongly and above plan and this is before we introduce exciting and new merchandise initiatives for the fall season. With our new distribution center alone, we expect to see a 1% improvement in operating margin due to efficiencies and freight management resulting from our move earlier in the year. Our infrastructure has been built over the last 18 months and is ready to support this growth.”
The Company is targeting sales over $170 million for TWC and expects to leverage its overhead to drive profits this year. For Big Dogs, the Company's goal is to stabilize income and to maintain contribution at the same level as last year. CEO Andrew Feshbach stated, “In summary we have grown our TWC business from approximately a $60 million business in 2004 to a $170 million business this year. We are optimistic about our prospects this year and the future.”