Fortress Investment Group agreed to lend Iconix Brand Group Inc. $300 million in order to pay off its notes that are due in June, sending Iconix stock higher in early trading.

This story first appeared in the March 8, 2016 issue of WWD. Subscribe Today.

Iconix was intending to refinance the 2.5 percent convertible senior subordinated notes that were due in June. Without refinancing, the company would have had to come up with the $300 million to pay the noteholders, something it looked increasingly unable to do. Just a few weeks ago, Iconix said it was on track to refinance the convertible notes but will instead borrow the money to pay the noteholders. Iconix stock is rising more than 13 percent to $9.55 on the news.

“Obviously the street is cheering it today as there was concern in some quarters that they would have difficulty in refinancing the notes with the issues swirling around the company,” said analyst Steve Marotta of C.L. King and Associates. “It does clear them of one very large near-term hurdle.”

The loan will not come cheaply. Iconix is expected to pay an additional $9 million in interest expense and amortization of financing fees from what was originally forecast during its guidance for 2016. Iconix will update its guidance when it reports fourth quarter earnings on May 11.

Marotta said he figured the lifeline will cost Iconix roughly $18 million more in interest but suggested it was a small price to pay in order to keep the company going.

“We are pleased to have successfully secured this new capital, which shows the confidence that Fortress has in our underlying business,” said Dave Jones, chief financial officer of Iconix. “With the refinancing path for the 2016 converts now in place, we look forward to a continued focus on our core business, including the growth of our worldwide brand management platform.”

The new five-year term loan will bear interest at LIBOR+10 percent per annum, payable quarterly with a 1.5 percent floor on LIBOR.

Over the last year, Iconix founder Neil Cole stepped down; there is an ongoing Securities and Exchange Commission investigation that led to the restatement of earnings, and the group adopted a poison pill to prevent a takeover. Recently, Pharrell Williams bought the G-Star brand from the group and Badgley Mischka bought back their brand from Iconix.

Iconix stock has declined 74 percent over the past year, but in the last month the shares have recovered 54 percent off their year low of $4.67.