RH announced the completion of a $2 billion debt financing by means of a Term Loan Credit Agreement through its subsidiary, Restoration Hardware, Inc. (“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 October 20, 2028 and a floating interest rate based on 2.5% spread over LIBOR subject to a 0.50% LIBOR floor.

Gary Friedman, Chairman and Chief Executive Officer of RH, commented, “This $2.0 billion debt financing creates substantial optionality as we continue to invest in positioning RH as a market defining, global luxury brand.”

Mr. Friedman continued, “The Term Loan represents an attractive cost of capital and enables RH to be opportunistic in creating long term value for our shareholders.”

Jack Preston, Chief Financial Officer of RH, commented, “We are pleased with the substantial level of support we received with our first issuance of rated debt. 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 BB rating from S&P Global.

Proceeds of the Term Loan are expected to be used for general corporate purposes. In addition, a portion of the proceeds are expected to be used to pay the principal amount of RH’s outstanding convertible notes that elect early conversion. As of October 20, 2021, holders of RH’s 0.00% convertible senior notes due 2023 (the “2023 Convertible Notes”) and RH’s 0.00% convertible senior notes due 2024 (the “2024 Convertible Notes”) have elected early conversion settlement with respect to $256 million in principal amount of the 2023 Convertible Notes and $124 million in principal amount of the 2024 Convertible Notes and RH anticipates that such early conversion elections will continue in advance of the maturity of the convertible notes. RH expects to pay holders in cash with respect to the principal amount of convertible notes that elect early conversion.