Blackstone Group announced plans to put $200 million into Crocs as John McCarvel steps aside April 14 as the shoe company's CEO the company said in a press release Sunday.
"We will add $200 million of long-term non-publicly traded preferred equity and the stock repurchase program, when completed, will reduce our publicly traded common stock float by approximately 30-percent (at today's market price), while maintaining a strong net cash position on our balance sheet," Jeff Lasher, chief financial officer at Crocs said in the release. "We expect these initiatives to reduce volatility in both our common stock price and our shareholder base and provide a strong foundation to unlock long-term value for our shareholders. We've been unable to repurchase stock while negotiating this transaction, but we now expect to do so beginning in the first quarter of 2014. We intend to be patient, methodical and opportunistic as we execute this expanded buyback plan."
McCarvel is also ending his tenure as Crocs president, and board member the press release reported.
"While Blackstone's investment will represent only 13% as-converted ownership at closing, we believe our company, shareholders, and employees will benefit from 100% of the firm's focus, resources, expertise and efforts to create shareholder value," Thomas Smach, chairman of the board at Crocs said in the release. "We believe this transaction provides a fantastic opportunity for our shareholders to participate alongside Blackstone and benefit from its efforts to realize very attractive future returns."
The deal is known as a preferred stock option, and is expected to have a cash dividend rate of six percent, which can be changed into corporate equity ownership shares at $14.50 a portion the press release reported.
"The partnership with Blackstone provides access to new resources and additional experience that we believe will positively and meaningfully impact the company's future performance," Prakash Melwani, senior managing director and chief investment officer at Blackstone said in a statement.
