By Abigail W. Adams
Portland, Me., June 13 – Restoration Hardware Inc. priced $300 million seven-year convertible notes after the market close on Wednesday with a coupon of 0% and an initial conversion premium of 25%, according to a company news release.
Pricing came in line with talk for a fixed coupon of 0% and at the cheap end of talk for 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. The transactions will limit dilution until the stock is above $309.84, representing a 100% premium over the closing stock price on June 13, according to a company news release.
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.
| Issuer: | Restoration Hardware Inc.
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| Securities: | Convertible senior notes
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| Amount: | $300 million
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| Greenshoe: | $50 million
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| Maturity: | June 15, 2023
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| Bookrunners: | BofA Merrill Lynch
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| Coupon: | 0%
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| Conversion premium: | 25%
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| Conversion price: | $193.65
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| Conversion rate: | 5.164
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| Call options: | Non-callable
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| Put options: | None
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| Pricing date: | June 13
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| Settlement date: | June 18
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| Talk: | Coupon of 0% and an initial conversion premium of 25%
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| Stock symbol: | NYSE: RH
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| Stock price: | $154.92 at market close June 13
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| Market capitalization: | $2.57 billion
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