The company priced that $300 million of 0% convertible senior notes due 2019 at $85.99, a 35% conversion premium over Wednesday's closing price. Initial purchasers will have a 13-day option to buy up to an additional $50 million of the senior notes with the same terms and conditions.
Under the terms of the transactions, Restoration Hardware shareholders aren't expected to experience dilution until the stock is above about $172, according to the company.
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TheStreet Ratings team rates RESTORATION HARDWARE HLDNGS as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate RESTORATION HARDWARE HLDNGS (RH) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income and expanding profit margins. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall."
Highlights from the analysis by TheStreet Ratings Team goes as follows: