RH $35 million partial greenshoe ups 0% convertibles to $335 million

By Wendy Van Sickle

Columbus, Ohio, June 28 – Restoration Hardware Inc. said a $35 million portion of the overallotment option for its 0% convertibles due June 15, 2023 was exercised, bringing the total deal size to $335 million.

The full overallotment option was sized at $50 million.

As previously reported, the company priced $300 million of the convertibles after the market close on June 13 with an initial conversion premium of 25%.

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%.

BofA Merrill Lynch is the sole bookrunner for the Rule 144A deal.

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 partial greenshoe exercise, Restoration Hardware entered 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 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.

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