Restoration Hardware trades modestly higher; secondary trading subdued amid golf outing

By Stephanie N. Rotondo and Rebecca Melvin

Phoenix, June 19 – Restoration Hardware Holdings Inc.’s newly priced 0% convertibles due 2019 added a couple of points on an outright basis in the early going Thursday after the Corte Madera, Calif.-based specialty retailer priced $300 million of the senior notes at the rich end of talked terms.

On a dollar-neutral, or hedged, basis, the new Restoration Hardware bonds were called up 1 point dollar neutral on a delta of 65%, or 102.625 bid, 103.125 offered versus a share price of $89.00, according to a New York-based trader.

Restoration Hardware shares closed up $2.52, or 2.93%, at $88.51.

The new notes carry an initial conversion premium of 35%.

BofA Merrill Lynch and Goldman Sachs & Co. led the deal. Initial price talk on the coupon was 0% to 0.5%, with a 30% to 35% premium.

Proceeds will be used to pay the net cost of the call spread and for general corporate purposes, including repayment of all of the outstanding debt under the company’s credit facility.

Elsewhere, convertibles were “more quiet than usual,” a trader said, attributing the lull to a sellsider golf outing that involved a number of convertible clients.

Early in the day, Ciena Corp.’s 0.875% convertibles due 2017 traded little changed at about 99.25. The notes ticked up slightly by the end of the day, closing at 99.375.

Shares of the Linthicum, Md.-based optical networking gear maker were fractionally lower at $22.24.

Mentioned in this article:

Restoration Hardware Holdings Inc. NYSE: RH

Ciena Corp. NYSE: CIEN

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