06-18-14 Restoration Hardware (RH)

300m (+50m) sen unsec cb ocming tonight from GS, BAC. Terms: 5y 0-0.5% up 30-35%, full pctns. UOP=gcp/repay debt.$3.2bn domestic home furnishing retailer. Founded in ’79, it currently operates

70 retail stores & 17 outlets within NA/Canada. Stk +53% from 02

/14 low & +42% alone last week (strong Q1). JEF rates stk a BUY with an $88 target. PFcash=136.8m, debt=300m (assuming revolv is paid down), LTMebitda=88m, Net lev=1.9x. We’d assume L+325 4 5y.

ADV=945k, 01/16 same strike calls ~35iv bid, 1y 100/200d=45/44%.

We’d assume 35%. Theo=97.3/99.2/101.2. -VES=striking option post

+42% move, low cpn on un-rated credit & stretched valuation, but

pricing will be driven by demand for under represented retail

sctr.  Like the product;  not v cheap but could be v popular.


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