RH exploring potential $300M convertible notes offering
RH announced that it intends to explore a potential offering of $300M aggregate principal amount of convertible notes due 2024 in a private offering to qualified institutional buyers. In the event the company chooses to complete the proposed $300M offering, RH would expect to enter into convertible note hedge and warrant transactions that are designed to offset the effect of dilution from the conversion of the notes up to 100% or more of the common stock price at the time of pricing of the notes. The proceeds from the offering would primarily be used to retire the company's $200M of outstanding second lien debt, reduce outstanding borrowings under the company's credit facility and to pay the net costs of the convertible note hedge and warrant transactions. The retirement of the company's second lien debt would reduce interest expense by approximately $6.5M in the second half of fiscal 2019, and $18M on an annual basis, and would enable the company to increase adjusted diluted earnings per share by approximately 20c-25c this year, and 65c-70c in fiscal 2020, the company stated.