CORTE MADERA, Calif.–(BUSINESS WIRE)–RH (NYSE: RH) today announced the completion of an additional $500 million term debt financing.
In line with the strategy of the initial $2.0 billion term debt financing in October 2021, the additional $500 million represents an attractive cost of capital and provides an option that will allow RH to be opportunistic in building long-term shareholder value.
The $500 million term debt financing (the “Additional 2022 Term Debt”) was completed through a 2022 incremental amendment through RH’s subsidiary, Restoration Hardware, Inc. ( “RHI”), as borrower, and Bank of America, NA as borrower. the administrative agent (in such capacity, the “Term Agent”) and the lender, amending the Term Credit Agreement, dated October 20, 2021 (the “Existing Credit Agreement”; the Existing Credit Agreement as amended by the 2022 Incremental Amendment, the “Amended Credit Agreement”), by and between RHI as Borrower, the Lenders parties thereto and the Term Agent.
The additional 2022 term debt has a maturity date of October 20, 2028 and bears interest at an annual rate based on the guaranteed overnight funding rate (“SOFR”) plus a credit spread adjustment of 0 .10% plus an interest rate margin of 3.25% subject to a SOFR floor of 0.50%.
The Company expects incremental interest expense resulting from the additional 2022 term debt to be approximately $4.5 million after tax for each fiscal quarter assuming current interest rate levels. Together with the original $2.0 billion term loan under the existing credit agreement, the after-tax interest rate cost for all $2.5 billion term debt under the amended credit agreement is expected to be approximately $17 million per quarter, based on current interest rates.
The 2022 incremental term debt issue received a Ba3 rating from Moody’s Investors Service and a BB rating from S&P Global.
Proceeds from the additional 2022 term debt are expected to be used for general corporate purposes.
Additional details regarding the additional 2022 term debt are available in the company’s current report on Form 8-K filed with the Securities and Exchange Commission on May 17, 2022.
RH (NYSE: RH) is a curator of design, taste and style in the luxury lifestyle market. The company offers collections in its retail galleries, sourcebooks, and online at RH.com, RHModern.com, RHBabyandChild.com, RHTEEN.com, and Waterworks.com.
This release contains forward-looking statements within the meaning of the federal securities laws, including, without limitation, statements regarding the terms and conditions of the 2022 Incremental Amendment and Amended Credit Agreement, the cost potential of the capital made available to the RH Subsidiaries under such amended credit agreement, the interest rate associated with the additional 2022 term debt, the length of time that the additional 2022 term debt may remain outstanding, the potential use of proceeds of amounts borrowed under the Amended Credit Agreement, sources and uses of capital, our belief that we will remain opportunistic with both sources and uses of capital, statements that debt 2022 Supplemental Term Debt represents an attractive instrument, our belief that 2022 Supplemental Term Debt will provide opportunities and flexibility additional ity in our capital allocation that will create value for our shareholders, representations regarding credit ratings the issuance, covenants and restrictions contained in the Amended Credit Agreement and the ability of the parties to the loan to maintain compliance with terms and conditions of the 2022 Incremental Amendment and amended Credit Agreement, from time to time. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “if”, “anticipate”, “estimate”, “expect”, “project”, “plan”, “intend”, “believe”, “may”. , “will”, “should”, “likely” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future events. We cannot assure you that future developments that affect us will be those that we have anticipated. The important risks and uncertainties that could cause actual results to differ materially from our expectations include, among others, risks and uncertainties relating to the aggregate overall level of indebtedness that we incur, the terms and conditions of any debt financing, including the amended credit agreement, the risks and uncertainties relating to the use of the proceeds of any debt financing, including the amended credit agreement, the risks and uncertainties relating to our decisions regarding the allocation and use of capital, risks and uncertainties relating to interest rate fluctuations, risks and uncertainties regarding whether the financial performance of the Company will meet expectations, and other risks and uncertainties disclosed in the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in HR’s Annual Report on Form 10-K most recently filed with the Securities and Exchange Commission, and similar disclosures in subsequent reports filed with the SEC, which are available on our Investor Relations website at ir.rh.com and on the SEC’s website at address www.sec.gov. You should not place undue reliance on these forward-looking statements. Any forward-looking statement made by us in this release speaks only as of the date on which we make it. RH expressly disclaims any obligation or undertaking to post any updates or revisions to these statements to reflect any change in its expectations regarding them or any change in events, conditions or circumstances on which any such statement is based.