CORTE MADERA, Calif .– (COMMERCIAL THREAD) – RH (NYSE: RH) today announced that it has completed a $ 2 billion debt financing (the “Term Loan”) through a Term Credit Agreement through its subsidiary Restoration Hardware, Inc. (“RHI”), as the borrower, Bank of America, NA as administrative agent and guarantee agent, and the various lenders party thereto (the “Term Credit Agreement “). The term loan has a maturity date of October 20, 2028 and a variable interest rate based on a 2.5% spread over LIBOR subject to a LIBOR floor of 0.50%.
Gary Friedman, president and CEO of HR, said: “This $ 2.0 billion debt financing creates a substantial option as we continue to invest in positioning HR as a market-defining global luxury brand. ”
Mr. Friedman continued: “The term loan represents an attractive cost of capital and allows HR to be opportunistic in creating long-term value for our shareholders.
Jack Preston, Chief Financial Officer of HR, said: “We are pleased with the substantial level of support we received with our first rated debt issue. We expect the additional interest expense resulting from the term loan to be approximately $ 11 million after tax in the fourth quarter of fiscal 2021. ”
The term loan issue received a Ba2 rating from Moody’s Investors Service and a BB rating from S&P Global.
The proceeds of the term loan should be used for general business purposes. In addition, a portion of the proceeds is expected to be used to pay the principal amount of outstanding convertible notes of RH which opt for early conversion. As of October 20, 2021, holders of senior convertible bonds at 0.00% RH maturing in 2023 (the “2023 Convertible Bonds”) and senior convertible bonds at 0.00% RH maturing in 2024 (the “Bonds 2024 Convertibles ”) have elected an early conversion settlement with respect to $ 256 million principal amount of the 2023 convertible notes and $ 124 million principal amount of the 2024 convertible notes and RH anticipates that these early conversion elections will continue prior to the maturity of convertible notes. RH expects to pay Holders in cash for the principal amount of Convertible Notes who opt for early conversion.
Additional details regarding the term loan are available in the company’s current report on Form 8-K filed with the Securities and Exchange Commission on October 25, 2021.
RH (NYSE: RH) is a curator of design, taste and style in the luxury lifestyle market. The Company offers collections in its retail galleries, source books and online at RH.com, RHModern.com, RHBebyandChild.com, RHTEEN.com and Waterworks.com.
This press release contains forward-looking statements within the meaning of federal securities laws, including, without limitation, statements regarding the terms and conditions of the Term Credit Agreement and Intercreditor Agreement, cost potential of the capital made available to HR subsidiaries under these Term Credit Agreements, the interest rate associated with the term loan, the length of time the term loan may remain unpaid, the potential use of the proceeds amounts borrowed under the term credit agreement, including the repayment of the 2023 and 2024 convertible notes, sources and uses of principal, our belief that we will remain opportunistic with respect to both sources and uses of capital, statements that term lending is an attractive instrument, our belief that term lending will provide additional opportunities and flexibility in our allocation of capital that will create value for our shareholders, statements regarding eastern credit ratings, the covenants and restrictions contained in the term loan agreement and the ability of the parties to the loan to meet the terms and conditions and the terms of the Term Loan Agreement and the Creditors Agreement from time to time. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “if”, “anticipate”, “estimate”, “expect”, “plan”, “plan”, “intend”, “believe”, “can” , “” “” Probable “and other words and terms of similar meaning in connection with any discussion of the timing or nature of future events. We cannot assure you that future developments that concern us will be those we anticipated. Significant risks and uncertainties that could cause actual results to differ materially from our expectations include, among other things, risks and uncertainties relating to the overall level of indebtedness we incur, the terms and conditions of any debt financing, including including the term credit agreement, the risks and uncertainties regarding the use of the proceeds of any debt financing, including the term credit agreement, the risks and uncertainties associated with our decisions regarding the allocation and use of capital, the risks and uncertainties associated with fluctuations in interest rates, the risks and uncertainties as to whether the financial performance of the Company meets expectations, and other risks and uncertainties disclosed in the sections entitled “Risk Factors ” and ” “Management’s Discussion and Analysis of Financial Condition and Results of Operations ”in HR’s Annual Report on Form 10-K most recently filed with the Securities and Exchange Commission, and similar information in subsequent reports filed with the SEC, which are available on our Investor Relations website. on ir.rh.com and on the SEC website at www.sec.gov. You should not place undue reliance on these forward-looking statements. Any forward-looking statements we make in this press release speak only as of the date on which we make them. RH expressly disclaims any obligation or commitment to publicly post any update or revision to such statements to reflect any change in its expectations in this regard or any change in the events, conditions or circumstances upon which such statement is based.