Crocs Chief Executive Officer John McCarvel will retire and Blackstone Group will invest $200 million in convertible preferred stock as the maker of colorful plastic clogs struggles to regain lost popularity.
The shoemaker will use the funds to increase stock repurchases to $350 million, Niwot, Colo.-based Crocs said in a statement. McCarvel will step down on or about April 30.
Crocs has been trying to revive its fortunes after consumers tired of its trademark clogs, knockoffs cut into sales and U.S. consumer spending slumped. The Blackstone investment comes after Crocs attempted to find a buyer for the whole company, people familiar with the situation said in November.
Weve been unable to repurchase stock while negotiating this transaction, but we now expect to do so beginning in the first quarter of 2014, Jeff Lasher, chief financial officer, said in the statement. The buybacks will reduce publicly traded common stock by about 30 percent, Lasher said.
Blackstone will be restricted from acquiring more than 25 percent of Crocs common shares until a time frame expires for appointing board directors, the shoe manufacturer said in a filing. Crocs will pay $2 million as a closing fee and reimburse as much as $4 million of Blackstones transaction fees and expenses once the preferred-stock sale is concluded, it said.
McCarvel, who took the helm in March 2010, expanded the companys products to include other styles of footwear and opened new stores. The shares have declined 7.4 percent this year in New York trading, compared with a 29 percent gain in the Standard & Poors 500 Index.
The board has begun an outside search for McCarvels replacement, according to the statement.
Calls to the offices of Crocs and Blackstone seeking comment werent immediately returned.
The preferred shares that Blackstone acquired have a 6 percent cash dividend rate and are convertible to common stock at $14.50 a share, Crocs said.