RH Announces Pricing of $300 Million Convertible Notes Offering
September 13 2019 - 7:00AM
Business Wire
RH (NYSE: RH) announced today the pricing of $300 million of
0.00% convertible notes due 2024 at a 25% conversion premium to
yesterday’s closing stock price of $169.12. RH also granted the
initial purchaser of the notes a 13-day option to purchase up to an
additional $50 million of the notes on the same terms and
conditions, for a total potential offering size of up to $350
million. The sale of the notes to the initial purchaser is expected
to settle on September 17, 2019, subject to customary closing
conditions.
In connection with the offering of the notes, RH has entered
into convertible note hedge and warrant transactions on terms that
have the effect of limiting earnings dilution as a result of the
convertible notes issuance up to a 100% premium to today’s closing
stock price. Under the terms of these transactions, the Company’s
shareholders are not expected to experience earnings dilution until
the Company’s stock price is above approximately $338.24.
RH expects to use the net proceeds from the offering to (i) pay
the net costs of the convertible note hedge and warrant
transactions, (ii) retire the Company’s $200 million of outstanding
second lien debt, (iii) reduce outstanding borrowings under the
Company’s credit facilities and (iv) for general corporate
purposes.
The notes will not bear interest and will mature on September
15, 2024, unless earlier purchased by us or converted. The initial
conversion rate is 4.7304 shares of common stock per $1,000
principal amount of notes, which is equivalent to an initial
conversion price of approximately $211.40 per share representing a
premium of 25% over yesterday’s closing stock price. The notes will
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 anticipated dilution impact to holders of
the common stock due to the notes and the convertible note hedge
and warrant transactions, any implications regarding the possible
future price of the Company’s common stock, the expected use of the
net proceeds from these transactions, and the anticipated timing of
the closing of the transactions. 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.
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version on businesswire.com: https://www.businesswire.com/news/home/20190913005117/en/
Allison Malkin 203-682-8225 allison.malkin@icrinc.com
RH (NYSE:RH)
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