CORTE MADERA, Calif.--(BUSINESS WIRE)--RH (NYSE: RH) today announced the repayment of its $100 million second lien term loan on October 10, 2017. The annualized cash interest rate on the second lien term loan was approximately 9.5% as of the date of retirement. The Company funded the repayment with borrowings on its asset backed credit facility, which bears current annualized interest of approximately 2.75%, as well as existing cash on its balance sheet.
As a result of the early repayment of the second lien term loan, and related reduction in interest expense, the Company expects an incremental $0.05 benefit to its fiscal 2017 adjusted diluted earnings per share.
Gary Friedman, RH Chairman and Chief Executive Officer, commented, “Based on our strong business performance, significant cash flow generation, and confidence in our future outlook, we are retiring the second lien term loan just over three months after securing it. The $100 million second lien term loan was intended to act as a short term bridge loan to help fund the Company’s purchase earlier this year of nearly one-half of its outstanding shares, which has created, and we believe will continue to create, significant shareholder value. The early debt retirement is expected to be incremental to the Company’s fiscal 2017 adjusted diluted earnings per share by approximately $0.05.”
RH (NYSE: RH) is a curator of design, taste and style in the luxury lifestyle market. The Company offers collections through its retail galleries, Source Books, and online at RH.com, RHModern.com, and Waterworks.com.
This release contains forward-looking statements within the meaning of the federal securities laws, including statements related to: the Company’s expectation of an incremental $0.05 benefit to its fiscal 2017 adjusted diluted earnings per share as a result of the early repayment of the second lien term loan and related reduction in interest expense, the Company’s confidence in its future outlook and the Company’s belief that the purchase earlier this year of nearly one-half of its outstanding shares will continue to create significant shareholder value. 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 “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 affecting us will be those that we have anticipated. Important risks and uncertainties that could cause actual results to differ materially from our expectations or the assumptions set forth in this release include, among others, our ability to retain key personnel; successful implementation of our growth strategy; our ability to leverage Waterworks; uncertainties in the current performance of our business including a range of risks related to our operations as well as external economic factors; general economic conditions and the impact on consumer confidence and spending; changes in customer demand for our products; our decisions concerning the allocation of capital; decisions concerning the allocation of capital including the extent to which we repurchase additional shares of our common stock which will affect shares outstanding and earnings per share; factors affecting our outstanding convertible senior notes or other forms of our indebtedness; our ability to anticipate consumer preferences and buying trends, and maintaining our brand promise to customers; changes in consumer spending based on weather and other conditions beyond our control; risks related to the number of new business initiatives we are undertaking; strikes and work stoppages affecting port workers and other industries involved in the transportation of our products; our ability to obtain our products in a timely fashion or in the quantities required; our ability to employ reasonable and appropriate security measures to protect personal information that we collect; our ability to support our growth with appropriate information technology systems; risks related to “conflict minerals” compliance and its impact on sourcing, if any, as well as those risks and uncertainties disclosed under the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in RH’s most recent Form 10-K and Form 10-Q 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 website at www.sec.gov. Any forward-looking statement made by us in this press release speaks only as of the date on which we make it. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by any applicable securities laws.