Boston, MA 06/19/2014 (wallstreetpr) – On Wednesday, Restoration Hardware Holdings Inc (NYSE:RH) declared the pricing of its offering consisting of $300 million convertible senior notes that are due to mature in 2019.
Pricing Of Notes
According to the pricing, the notes will be issued at a 35% premium on the closing price of the stock on Wednesday, that is, $85.99. Apart from that, the company also gave a 13-day window to the initial purchasers, as per which, they will be allowed to make an additional purchase of $50 million worth of notes. Moreover, in order to prevent dilution of up to a 100% premium on today’s closing price, the company has taken hedge and warrant positions. As per terms of these warrant and hedge transactions, the shareholders of Restoration Hardware Holdings Inc (NYSE:RH) will not witness dilution of shares untill and unless the company’s stock price breaches levels of $172.
Fund Utilization
The objective of issuing the note is that the company aims to utilize the additional capital to finance its business initiatives, which includes the constant evolution of its real-estate platform, focussing on the strengthening of its balance sheet over a span of five years and to repay higher interest borrowings from the company’s existing credit line. However, the more immediate utilization of the funds will be towards settling the net cost associated with the company’s hedge transactions and to reduce the indebtedness. The sale of the offering is likely to close on June 24, 2014, subject to standard terms and conditions.
The issued notes will not carry interest and will be due to mature on June 15, 2019. Notes aggregating $1,000 of principle amount will be converted into 8.6143 shares of the company’s common stock, which is equivalent to the conversion price of $116,09 per share, indicating 35% premium of the Wednesday’s closing price of $85.99. The notes could be converted into cash, shares or a combination of both, depending on Restoration Hardware Holdings Inc (NYSE:RH)’s decision.
