RH completed a $2 billion debt financing by means of a term loan credit agreement through its subsidiary, Restoration Hardware (RHI), as the borrower, Bank of America as administrative agent and collateral agent and the various lenders party thereto. The term loan has a maturity date of Oct. 20, 2028, and a floating interest rate based on 2.5% spread over LIBOR subject to a 0.5% LIBOR floor.
“This $2 billion debt financing creates substantial optionality as we continue to invest in positioning RH as a market defining global luxury brand,” Gary Friedman, chairman and CEO of RH, said. “The term loan represents an attractive cost of capital and enables RH to be opportunistic in creating long-term value for our shareholders.”
“We are pleased with the substantial level of support we received with our first issuance of rated debt,” Jack Preston, CFO of RH, said. “We anticipate that the additional interest expense as a result of the term loan will be approximately $11 million on an after-tax basis in the fiscal fourth quarter of 2021.”
The issuance of the term loan was assigned a Ba2 rating from Moody’s Investors Service and a BB rating from S&P Global.
RH expects to use the proceeds from the term loan for general corporate purposes. In addition, the company will use a portion of the proceeds to pay the principal amount of its outstanding convertible notes that elect early conversion.
