Restoration Hardware plans $300 million five-year convertibles to yield 0%-0.5%, up 30%-35%

By Rebecca Melvin

New York, June 16 – Restoration Hardware Holdings Inc. launched a $300 million offering of five-year convertible senior notes after the market close Monday that it planned to price after the market close on Wednesday. The notes were talked to yield 0% to 0.5% with an initial conversion premium of 30% to 35%, according to a market source.

The Rule 144A deal has a $50 million greenshoe and was being sold via BofA Merrill Lynch and Goldman Sachs & Co. as joint bookrunners.

The notes are non-callable and have net share settlement.

In connection with the notes, Restoration Hardware expects to enter into convertible note hedge and warrant transactions, or a call spread.

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 its credit facility.

Corte Madera, Calif.-based Restoration Hardware is a specialty retailer.

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