S&P gives Restoration Hardware loan BB

S&P said it gave BB issue-level and 3 recovery ratings to Restoration Hardware Inc.’s planned $1 billion term loan B-2. The 3 recovery rating indicates meaningful (50%-70%; rounded estimate: 50%) recovery in default.

“The rating on the proposed term loan issuance is equal to the rating on the company's existing $2 billion term loan because of its equal security ranking in the capital structure. The issue-level and recovery ratings are unchanged despite the increase in debt because we believe the additional interest burden would result in a shorter path to default and a higher default valuation than under its existing capital structure,” the agency said in a press release.

S&P said it expects a portion of the proceeds to be used for share repurchases.

The outlook is stable.

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