There’s nothing subtle about home furnishings retailer Restoration Hardware: lavish galleries, a radical new membership program, ambitious plans to expand into apparel and restaurants. Even the company’s stock price reflects this audacity — soaring to a ridiculous high of $105 per share last year only to come crashing down to $40 this month. For better or for worse, Restoration Hardware, based in Corte Madera, always makes a statement. This week, the company reported a disappointing fourth quarter, marred by severe supply chain disruptions. But the company’s stock-price woes are rooted in something more troubling than one bad quarter. To fund its ambitious expansion plans, Restoration Hardware raised $300 million two years ago by issuing a risky bond called a zero percent convertible senior note. The financial instrument, typically used by companies with poor credit, offers investors no interest for the life of the bond. In exchange, Restoration Hardware investors, most likely hedge funds, will be able to convert the note into cash or stock in 2019 worth $116.08 per share, which represents a 35 percent premium from the company’s closing stock price of $85.99 on June 18, 2014. More by Thomas Lee Biz & TechBy Thomas LeeMicrosoft dodged a bullet… Read full this story
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