RH Exploring Potential $300 Million Convertible Notes Offering
13 September 2019 - 12:54AM
Business Wire
RH (NYSE: RH) announced today that it intends to explore a
potential offering of $300 million aggregate principal amount of
convertible notes due 2024 in a private offering to qualified
institutional buyers.
In the event the Company chooses to complete the proposed $300
million offering, RH would expect to enter into convertible note
hedge and warrant transactions that are designed to offset the
effect of dilution from the conversion of the notes up to 100% or
more of the common stock price at the time of pricing of the
notes.
The proceeds from the offering would primarily be used to retire
the Company’s $200 million of outstanding second lien debt, reduce
outstanding borrowings under the Company’s credit facility and to
pay the net costs of the convertible note hedge and warrant
transactions. The retirement of the Company’s second lien debt
would reduce interest expense by approximately $6.5 million in the
second half of fiscal 2019, and $18 million on an annual basis, and
would enable the Company to increase adjusted diluted earnings per
share by approximately $0.20 to $0.25 this year, and $0.65 to $0.70
in fiscal 2020.
The interest rate, conversion price and other terms of any new
issuance of notes are subject to the final pricing determination in
connection with any offering. The notes would be convertible into
cash, shares of RH’s common stock, or a combination thereof, at
RH’s election.
This press release does not constitute an offer to sell or the
solicitation of an offer to buy, 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 any such state or
jurisdiction. The notes and the shares of common stock issuable
upon conversion of the notes, if any, will not be registered under
the Securities Act of 1933, as amended (the “Act”) or any state
securities laws, and unless so registered, may not be offered or
sold in the United States except pursuant to an exemption from the
registration requirements of the Act and applicable state laws.
About RH
RH (NYSE: RH) is a curator of design, taste and style in the
luxury lifestyle market. The Company offers collections through its
Retail Galleries, Source Books, and online at RH.com, RHModern.com,
RHBeachHouse.com, RHBabyandChild.com, RHTeen.com, and waterworks.com.
Forward-Looking Statements
Some of the statements in this press release are
“forward-looking” and are made pursuant to the safe harbor
provision of the Private Securities Litigation Reform Act of 1995.
These “forward looking” statements include statements relating to,
among other things, the proposed offering of the notes, the
anticipated terms of the notes and the convertible note hedge and
warrant transactions as well as any dilution impact to holders of
the common stock, any implications regarding the possible future
price of the Company’s common stock, the expected use of the net
proceeds from these transactions, the Company’s expectations
regarding a reduction in interest expense, the Company’s
expectations regarding an increase in adjusted diluted earnings per
share, the Company’s expectations concerning market conditions for
an offering of the notes, and any statements or assumptions
underlying any of the foregoing. These statements involve risks and
uncertainties that may cause results to differ materially from the
statements set forth in this press release. The forward-looking
statements in this press release speak only as of the date of this
press release and are subject to uncertainty and changes. Given
these circumstances, you should not place undue reliance on these
forward-looking statements. RH expressly disclaims any obligation
or undertaking to release publicly any updates or revisions to such
forward-looking statements to reflect any change in its
expectations with regard thereto or any changes in the events,
conditions or circumstances on which any such statement is based.
The Company is not able to provide a reconciliation of the
Company’s estimate regarding the increase in adjusted diluted
earnings per share for fiscal year 2019 or fiscal year 2020 to the
corresponding GAAP measure without unreasonable effort because of
the uncertainty and variability of the nature and amount of certain
charges and gains removed from the corresponding GAAP measure in
computing adjusted diluted earnings per share.
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version on businesswire.com: https://www.businesswire.com/news/home/20190912005670/en/
Allison Malkin 203-682-8225 allison.malkin@icrinc.com
RH (NYSE:RH)
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