Winnebago Industries, Inc. (NYSE: WGO) (the “Company”), a leading
outdoor lifestyle product manufacturer, priced $300 million
aggregate principal amount of 3.250% convertible senior notes due
2030 (the “notes”) in a previously announced private offering to
persons reasonably believed to be qualified institutional buyers
pursuant to Rule 144A under the Securities Act of 1933, as amended
(the “Securities Act”). In connection with the offering, the
Company has granted the initial purchasers a 13-day option to
purchase up to an additional $50 million aggregate principal amount
of notes.
The notes will bear interest at a rate of 3.250% per year,
payable semi-annually in arrears on January 15 and July 15 of each
year, beginning July 15, 2024. The notes will mature on January 15,
2030, unless repurchased, redeemed or converted in accordance with
their terms prior to such date. Prior to July 15, 2029, the notes
will be convertible only upon satisfaction of certain conditions
and during certain periods, and on and after July 15, 2029, at any
time until the close of business on the second scheduled trading
day immediately before the maturity date.
The Company will settle conversions in cash and, if applicable,
shares of its common stock, based on the applicable conversion
rate(s). The notes will be redeemable, in whole or in part (subject
to certain limitations), for cash at the Company’s option at any
time, and from time to time, on or after January 15, 2028 and on or
before the 40th scheduled trading day immediately before the
maturity date, but only if the last reported sale price per share
of the Company’s common stock exceeds 130% of the conversion price
for a specified period of time. The redemption price will be equal
to the principal amount of the notes to be redeemed, plus accrued
and unpaid interest, if any, to, but excluding, the redemption
date. Holders of the notes will have the right to require the
Company to repurchase all or any portion of their notes at 100% of
their principal amount, plus any accrued and unpaid interest, upon
the occurrence of certain fundamental changes.
The conversion rate will initially be 11.3724 shares of common
stock per $1,000 principal amount of notes (equivalent to an
initial conversion price of approximately $87.93 per share of the
Company’s common stock), subject to adjustment. The initial
conversion price of the notes represents a premium of approximately
30.0% over the $67.64 per share closing price of the Company’s
common stock on January 18, 2024. The sale of the notes is expected
to close January 23, 2024, subject to customary closing
conditions.
The Company estimates that the net proceeds from the offering
will be approximately $291.1 million (or approximately $339.8
million if the initial purchasers fully exercise their option to
purchase additional notes), after deducting the initial purchasers’
discounts and commissions and estimated offering expenses. The
Company intends to use approximately $32.0 million of the net
proceeds to fund the cost of entering into the convertible note
hedge transactions described below (after such cost is partially
offset by the proceeds from entering into the warrant transactions
described below). The Company expects to use approximately $295
million of the net proceeds to repurchase approximately $241
million aggregate principal amount of its outstanding 1.50%
Convertible Senior Notes due 2025 (the “2025 Notes”) concurrently
with the offering in privately negotiated transactions effected
through one of the initial purchasers of the notes or its
affiliate, as the Company’s agent. The Company intends to use the
remainder of the net proceeds from the offering for general
corporate purposes. If the initial purchasers exercise their option
to purchase additional notes, then the Company intends to use a
portion of the additional net proceeds to fund the cost of entering
into additional convertible note hedge transactions as described
below (after such cost is partially offset by the proceeds from
entering into the additional warrant transactions described below).
Holders of the 2025 Notes that are repurchased in the concurrent
repurchases described above may purchase shares of the Company’s
common stock in the open market to unwind any hedge positions they
may have with respect to the 2025 Notes. These activities may
affect the trading price of the Company’s common stock and the
initial conversion price of the notes.
In connection with issuing the 2025 Notes, the Company entered
into convertible note hedge transactions (the “existing convertible
note hedge transactions”) and warrant transactions (the “existing
warrant transactions,” and, together with the existing convertible
note hedge transactions, the “existing call spread transactions”)
with certain financial institutions (the “existing option
counterparties”). If the Company repurchases any of its 2025 Notes,
then the Company may enter into agreements with the existing option
counterparties to terminate a portion of the existing convertible
note hedge transactions in a notional amount corresponding to the
amount of 2025 Notes repurchased. The Company may also enter into
agreements with the existing option counterparties to terminate a
portion of the existing warrant transactions. In connection with
the termination of any of the existing call spread transactions,
the Company expects the existing option counterparties or their
respective affiliates to unwind their related hedge positions,
which may involve the sale of shares of the Company’s common stock
in the open market or other transactions with respect to the
Company’s common stock. This hedge unwind activity could offset or
exacerbate the effects of the purchase, sale or other activity that
holders of the 2025 Notes that participate in the repurchase
transactions may effect in connection with those transactions.
In connection with the pricing of the notes, the Company entered
into privately negotiated convertible note hedge transactions with
one or more of the initial purchasers or their respective
affiliates or other financial institutions (the “hedge
counterparties”). The convertible note hedge transactions cover,
subject to customary anti-dilution adjustments, the number of
shares of the Company’s common stock that will initially underlie
the notes. The Company also entered into one or more separate,
privately negotiated warrant transactions with the hedge
counterparties collectively relating to the same number of shares
of the Company’s common stock, subject to customary anti-dilution
adjustments, and for which the Company will receive premiums to
partially offset the cost of entering into the hedge transactions.
If the initial purchasers exercise their option to purchase
additional notes, the Company may enter into one or more additional
convertible note hedge transactions and one or more additional
warrant transactions with the hedge counterparties, which, if
executed, will initially cover, collectively, the number of shares
of the Company’s common stock that will initially underlie the
additional notes the Company sells to the initial purchasers.
The convertible note hedge transactions are expected generally
to reduce the potential dilution to the Company’s common stock upon
any conversion of the notes and/or offset any potential cash
payments the Company is required to make in excess of the principal
amount of converted notes, as the case may be. However, the warrant
transactions could separately have a dilutive effect with respect
to the Company’s common stock to the extent that the market value
per share of the Company’s common stock exceeds the strike price of
the warrants evidenced by the warrant transactions. The strike
price of the warrants will initially be $135.28 per share, which
represents a premium of 100% over the per share closing price of
the Company’s common stock on January 18, 2024, and is subject to
certain adjustments under the terms of the warrant
transactions.
In connection with establishing their initial hedges with
respect to the convertible note hedge transactions and the warrant
transactions, the hedge counterparties or their respective
affiliates expect to enter into various cash-settled,
over-the-counter derivative transactions with respect to the
Company’s common stock concurrently with, or shortly after, or
purchase shares of the Company’s common stock shortly after, the
pricing of the notes, and may unwind these cash-settled
over-the-counter derivative transactions and purchase shares of the
Company’s common stock in open market transactions shortly after
the pricing of the notes. These activities could increase, or
prevent a decline in, the market price of the Company’s common
stock concurrently with, or shortly after, the pricing of the
notes.
In addition, the hedge counterparties or their respective
affiliates may modify their hedge positions with respect to the
convertible note hedge transactions and the warrant transactions
from time to time after the pricing of the notes, and are likely to
do so during any observation period, by purchasing or selling
shares of the Company’s common stock or the notes in privately
negotiated transactions or open market transactions or by entering
into or unwinding various over-the-counter derivative transactions
with respect to the Company’s common stock. Any of these activities
could, however, adversely affect the trading price of the Company’s
common stock and, consequently, the value of the consideration that
noteholders receive upon conversion of the notes, the trading price
of the notes or noteholders’ ability to convert the notes.
The offer and sale of the notes and the shares of common stock,
if any, issuable upon conversion of the notes have not been
registered under the Securities Act or any state securities laws,
and the notes and such shares may not be offered or sold absent
registration or an applicable exemption from, or in a transaction
not subject to, the registration requirements of the Securities Act
and applicable state laws.
This press release does not constitute an offer to sell or a
solicitation of an offer to buy the securities described herein,
nor shall there be any sale of these securities in any state or
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of such jurisdiction. Any offers of the notes will
be made only by means of a private offering memorandum. The notes
being offered have not been approved or disapproved by any
regulatory authority, nor has any such authority passed upon the
accuracy or adequacy of the applicable private offering
memorandum.
About Winnebago IndustriesWinnebago Industries, Inc. is a
leading North American manufacturer of outdoor lifestyle products
under the Winnebago, Grand Design, Chris-Craft, Newmar and Barletta
brands, which are used primarily in leisure travel and outdoor
recreation activities. The Company builds high-quality motorhomes,
travel trailers, fifth-wheel products, outboard and sterndrive
powerboats, pontoons, and commercial community outreach vehicles.
Committed to advancing sustainable innovation and leveraging
vertical integration in key component areas, Winnebago Industries
has multiple facilities in Iowa, Indiana, Minnesota and Florida.
The Company’s common stock is listed on the New York Stock Exchange
and traded under the symbol WGO. For access to Winnebago
Industries' investor relations material or to add your name to an
automatic email list for Company news releases, visit
http://investor.wgo.net.
Forward-Looking StatementsThis press release may contain
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Investors are cautioned
that forward-looking statements are inherently uncertain. A number
of factors could cause actual results to differ materially from
these statements, including, but not limited to risks related to
the offering of the notes, general economic uncertainty in key
markets and a worsening of domestic and global economic conditions
or low levels of economic growth; availability of financing for RV
and marine dealers; competition and new product introductions by
competitors; ability to innovate and commercialize new products;
ability to manage the Company’s inventory to meet demand; risk
related to cyclicality and seasonality of the Company’s business;
risk related to independent dealers; risk related to dealer
consolidation or the loss of a significant dealer; significant
increase in repurchase obligations; ability to retain relationships
with the Company’s suppliers and obtain components; business or
production disruptions; inadequate management of dealer inventory
levels; increased material and component costs, including
availability and price of fuel and other raw materials; ability to
integrate mergers and acquisitions; ability to attract and retain
qualified personnel and changes in market compensation rates;
exposure to warranty claims; ability to protect the Company’s
information technology systems from data security, cyberattacks,
and network disruption risks and the ability to successfully
upgrade and evolve the Company’s information technology systems;
ability to retain brand reputation and related exposure to product
liability claims; governmental regulation, including for climate
change; increased attention to environmental, social, and
governance ("ESG") matters, and the Company’s ability to meet its
commitments; impairment of goodwill and trade names; and risks
related to the Company’s Convertible and Senior Secured Notes
including its ability to satisfy its obligations under these notes.
Additional information concerning certain risks and uncertainties
that could cause actual results to differ materially from that
projected or suggested is contained in the Company's filings with
the Securities and Exchange Commission ("SEC") over the last 12
months, copies of which are available from the SEC or from the
Company upon request. The Company disclaims any obligation or
undertaking to disseminate any updates or revisions to any
forward-looking statements contained in this release or to reflect
any changes in the Company's expectations after the date of this
release or any change in events, conditions or circumstances on
which any statement is based, except as required by law.
Contacts
Investors: Ray Posadasir@winnebagoind.com
Media: Dan Sullivanmedia@winnebagoind.com
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