Restoration Hardware talks $300 million five-year convertibles with fixed 0% coupon, up 25% to 30%

By Abigail W. Adams

Portland, Me., June 12 – Restoration Hardware Inc. plans to price $300 million in five-year convertible notes after the market close on Wednesday with price talk for a fixed coupon of 0% and an initial conversion premium of 25% to 30%, according to a market source.

BofA Merrill Lynch is the sole bookrunner for the Rule 144A deal, which carries a greenshoe of $50 million.

The notes are non-callable and have no put options.

The notes carry dividend protection via a conversion ratio adjustment. There is takeover protection via a make-whole adjustment premium delivered as incremental shares.

In connection with the offering, Restoration Hardware will enter into convertible note hedge and warrant transactions.

Proceeds will be used to cover the cost of the call spread and repay indebtedness. Restoration Hardware intends to repay the principal balance of its 0% convertible notes due 2019 and 2020 in cash, according to the company news release.

Restoration Hardware is a Corte Madera, Calif.-based distributor of home furnishing products.

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