RH greenshoe increases 0% five-year convertibles to $350 million

By Wendy Van Sickle

Columbus, Ohio, Sept. 16 – Underwriters for RH’s 0% convertible notes due Sept. 15, 2024 fully exercised their $50 million over-allotment option, lifting the total deal size to $350 million, according to a company news release.

The notes priced on Thursday with an initial conversion premium of 25%, as previously reported.

BofA Securities Inc. was the bookrunner for the Rule 144A deal.

The notes are non-callable and have no puts. There is contingent conversion at a price trigger of 130% of the conversion price.

In connection with the notes offering, RH entered into convertible note hedge and warrant transactions on terms that have the effect of boosting the initial conversion premium to 100% from the issuer’s perspective, or to about $338.24.

Proceeds will be used to pay the net cost of the convertible note hedge and warrant transactions and to retire the company’s $200 million outstanding second-lien debt and reduce borrowings under its credit facility, as well as for general corporate purposes.

The notes would be convertible into cash, shares of common stock or a combination of the two.

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

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