Rent the Runway Announces Corporate Debt Restructuring
January 31 2023 - 7:25AM
Rent the Runway, Inc. (“Rent the Runway” or “RTR”) (Nasdaq: RENT),
the largest shared designer closet, today announced that it has
amended its credit facility with the existing lender and
administrative agent (“Existing Lender”), as noted in our disclosed
regulatory filings. The amended facility extends the maturity date
from October 2024 to October 2026, reduces cash interest payments,
and amends certain other terms, as described below (the “Amended
Facility”).
The combination of the extended maturity and reduced cash
interest payments, totaling over $20M in cash during the next two
years, provides significant strategic flexibility, strengthening
Rent the Runway's financial profile, cash flow trajectory and
ability to fund profitable growth. The Amended Facility complements
the steps Rent the Runway has already taken to significantly
improve its cost structure and profitability, such as reducing its
fixed cost base, transforming the capital efficiency of its product
acquisition and changing its subscription programs, which have
resulted in doubling of gross margins since 2019 to 41% in
Q3’22.
"We are thrilled to close Rent the Runway’s 2022 fiscal year
with this important milestone, yet another proofpoint of our
commitment to balancing robust growth with profitability. The
Amended Facility significantly improves our credit position and
cash interest obligations over the next several years, and, we
believe, bolsters our path to free cash flow profitability in the
medium term,” said Scarlett O’Sullivan, CFO of Rent the Runway.
“We believe this extension in maturity and reduction in cash
interest is transformative to our strategic plans and puts RTR in
an even better position to reach our growth and profitability goals
and capture the large opportunity we see ahead,” said Jennifer
Hyman, Co-Founder, Chair and CEO of Rent the Runway.
The key terms of the Amended Facility include:
- 2-Year Maturity Date Extension: From October
2024 to October 2026
- Cash Interest Rate Reduction: Previously 12%
total interest (consisting of 7% cash and 5% paid in kind) revised
as follows: 2% cash interest from February 1, 2023 through July 31,
2024, increasing to 5% cash interest for the remaining duration of
the term (with the remainder of the total interest in each period
to be paid in kind). The total interest rate will remain unchanged
at 12% through January 31, 2024, subsequently increasing 1%
annually.
- New Warrants: Existing Lender will receive
warrants to purchase two million shares of RTR’s Class A Common
Stock at $5.00/share strike price.
- Board of Directors Observer Seat: Existing
Lender will continue to maintain one observer seat, as they have
done since 2018.
- Certain other clarifications and updates
Other key provisions of the Amended Facility remain unchanged
from the existing facility, including the minimum liquidity
covenant of $50M.
Additional information about the Amended Facility can be found
in the Current Report on Form 8-K filed by RTR with the SEC today
and available on the RTR’s Investor Relations website
(investors.renttherunway.com).
About Rent the RunwayFounded in 2009, Rent the
Runway is disrupting the trillion-dollar fashion industry and
changing the way women get dressed through the Closet in the Cloud,
the world’s first and largest shared designer closet. RTR’s mission
has remained the same since its founding: powering women to feel
their best every day. Through RTR, customers can subscribe, rent
items a-la-carte and shop resale from over 800 designer brands. The
Closet in the Cloud offers a wide assortment of millions of items
for every occasion, from evening wear and accessories to
ready-to-wear, workwear, denim, casual, maternity, outerwear,
blouses, knitwear, loungewear, jewelry, handbags, activewear, ski
wear, home goods and kidswear. RTR has built a two-sided discovery
engine, which connects deeply engaged customers and differentiated
brand partners on a powerful platform built around its brand, data,
logistics and technology. Under CEO and Co-Founder Jennifer Hyman’s
leadership, RTR has been named to CNBC’s “Disruptor 50” five times
in ten years, and has been placed on Fast Company’s Most Innovative
Companies list four times, while Hyman herself has been named to
the “TIME 100: Most Influential People in the World" and as one of
People Magazine’s “Women Changing the World.”
Cautionary Statement Regarding Forward-Looking
StatementsThis press release contains forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements include all
statements that are not historical fact, including statements
related to Rent the Runway’s financial profile, future cash runway
and interest payments, future growth and profitability goals,
market opportunities, and shareholder value. Forward-looking
statements involve substantial risks and uncertainties that may
cause actual results to differ materially from expectations. These
risks and uncertainties are more fully described in our filings
with the Securities and Exchange Commission, including in the
section entitled “Risk Factors” in Rent the Runway’s Quarterly
Report on Form 10-Q for the quarter ended October 31, 2022, and
subsequent reports that Rent the Runway files with the Securities
and Exchange Commission. Forward-looking statements represent Rent
the Runway’s beliefs and assumptions only as of the date of this
release. Rent the Runway disclaims any obligation to update
forward-looking statements, except as required by law.
Investor ContactJackie
Blattinvestors@renttherunway.com
Media ContactAlison
Rappaportpress@renttherunway.com
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