Iconix Prices $275M Notes Offering

Iconix Brand Group, Inc. announced the pricing of its private offering
of $275 million aggregate principal amount of 2.50 percent convertible
senior subordinated notes due 2016.

Iconix has granted the initial purchasers of the notes a 30-day option to purchase up to an additional $25 million aggregate principal amount of notes, solely to cover over-allotments, if any. The offering is expected to close on May 23, 2011, subject to certain closing conditions.

The notes will be Iconix’s unsecured obligations, subordinated in right of payment to existing and future secured senior indebtedness. The notes will pay interest semi-annually in cash on June 1 and December 1 at a rate of 2.50 percent per year, commencing December 1, 2011. The notes will mature on June 1, 2016. The holders of the notes will have the ability to require Iconix to repurchase all or any portion of their notes for cash in the event of a fundamental change. In such case, the repurchase price would be 100% of the principal amount of the notes being repurchased plus any accrued and unpaid interest.

Prior to March 1, 2016, the notes will be convertible only upon the occurrence of certain events and during certain periods, and thereafter, at any time until the business day preceding the maturity date of the notes. The notes will be convertible at an initial conversion rate of 32.5169 shares of Iconix common stock per $1,000 principal amount of the notes, which is equivalent to an initial conversion price of approximately $30.75, which represents a 32.5 percent conversion premium to the last sale price of $23.21 per share of Iconix common stock on the NASDAQ on May 17, 2011. In addition, following certain corporate transactions that occur prior to the maturity date, Iconix will, in certain circumstances, increase the conversion rate for a holder that elects to convert its notes in connection with such corporate transaction. Upon any conversion, Iconix’s conversion obligation will be settled in cash up to the principal amount and, to the extent of any excess over the principal amount, in shares of Iconix common stock, or, if Iconix so elects, cash.

In connection with the offering of the notes, Iconix has entered into privately negotiated convertible note hedge transactions with one or more dealers, each of whom is an initial purchaser of the notes or an affiliate thereof.. The convertible note hedge transactions will cover, subject to customary anti-dilution adjustments, the number of shares of Iconix common stock that will initially underlie the notes.  Iconix has also entered into separate privately negotiated warrant transactions with the hedge counterparties relating to the same number of shares of Iconix common stock.  The strike price of the warrant transactions will initially be approximately $40.6175 per share, which represents a 75.0 percent premium to the last sale price of Iconix common stock on the NASDAQ on May 17, 2011.  In addition, if the initial purchasers exercise their over-allotment option to purchase additional notes, Iconix expects to sell additional warrants and to use a portion of the proceeds from the sale of the additional notes and from the sale of the corresponding additional warrants to enter into additional convertible note hedge transactions.  The convertible note hedge transactions are expected to reduce the potential dilution with respect to Iconix common stock upon conversion of the notes.  However, the warrant transactions will have a dilutive effect with respect to Iconix common stock to the extent that the market price per share of Iconix common stock exceeds the applicable strike price of the warrants on any expiration date of the warrants.

In connection with establishing their initial hedges of the convertible note hedge transactions and warrant transactions and concurrently with, or shortly after, the pricing of the notes, the hedge counterparties and/or their affiliates expect to purchase Iconix common stock in open market transactions and/or privately negotiated transactions and/or enter into various cash-settled derivative transactions with respect to Iconix common stock. In addition, the hedge counterparties and/or their affiliates may modify their hedge positions by entering into or unwinding various derivative transactions with respect to Iconix common stock and/or by purchasing or selling Iconix common stock in open market transactions and/or privately negotiated transactions following the pricing of the notes from time to time (and are likely to do so during any conversion period related to a conversion of notes). Any of these hedging activities could also increase, decrease or prevent a decline in, the market price of Iconix common stock.

Iconix estimates that the net proceeds from the offering of the notes will be approximately $268.1 million (or approximately $292.5 million if the initial purchasers exercise their over-allotment option in full), after deducting the initial purchasers fees, but excluding offering expenses.  In addition, Iconix expects to receive proceeds from the sale of the warrants.  Iconix expects to use the net proceeds from the offering of the notes (i) to fund the net cost of a convertible note hedge transaction with hedge counterparties, (ii) to prepay the outstanding balance of indebtedness under its term loan facility due January 1, 2012 within 90 days after the closing of the offering, (iii) to make future repayment on the existing convertible senior subordinated notes, which may be on or prior to the maturity date thereof, and (iv) for general corporate purposes, which may include, but are not limited to, investing in or acquiring new brands through opportunistic mergers, stock or asset purchases and/or other strategic relationships, although there are no present commitments or agreements with respect to any such investments or acquisitions.