Collegiate Pacific announced the pricing of a private offering of $40 million principal amount of convertible senior subordinated notes due 2009 to a limited number of qualified institutional buyers pursuant to Rule 144A. The notes will bear interest at a rate of 5.75% per year and will be general unsecured obligations of the Company subordinate in right of payment to all existing and future secured bank debt of the Company. The Company has also granted the initial purchaser of the notes a 13-day option to purchase an additional $10 million principal amount of the notes. The sale of the notes is expected to close on November 26, 2004.
The notes will be convertible at the option of the holder into shares of the Company’s common stock at an initial conversion rate of 68.2594 shares per $1,000 principal amount of the notes, subject to adjustment in certain circumstances. The initial conversion rate is equivalent to a conversion price of approximately $14.65 per share. The last reported sale price of the Company’s common stock on November 22, 2004 was $13.31 per share.
The Company intends to use substantially all of the net proceeds from the private offering for general corporate purposes, including future acquisitions. The Company also intends to use approximately $1.2 million of such net proceeds to prepay all outstanding borrowings under its revolving line of credit.
