• Home
  • News
  • Business
  • Rent the Runway secures extended credit facility as part of debt restructuring

Rent the Runway secures extended credit facility as part of debt restructuring

By Rachel Douglass



Image: Rent the Runway

Rent the Runway (RTR) has announced an amended credit facility with its existing lender and administrative agent Double Helix, extending the maturity date from October 2024 to October 2026.

The facility will also reduce cash interest payments, totalling over 20 million dollars in cash over the next two years.

Previously set at 12 percent total interest, the rate reduction will now come in at two percent from February 1 through to July 31, increasing to five percent for the remainder of the term.

Additionally, the lender will receive warrants to purchase two million shares of the company’s common stock at five dollars per share.

Other key provisions will remain unchanged, including the minimum liquidity covenant of 50 million dollars.

Amendments to provide strategic flexibility

RTR said the adjustments will allow significant strategic flexibility, strengthening its financial profile, cash flow trajectory and ability to fund profitable growth.

It comes as part of RTR’s recent efforts to improve its cost structure and profitability, such as reducing its fixed cost base and transforming the capital efficiency of its product acquisition, the company said in a regulatory filing.

It had also adjusted its subscription programmes, which it noted had resulted in doubled gross margins to 41 percent in Q3 2022, since 2019.

In the filing, Jennifer Hyman, co-founder, chair and CEO of RTR, said: “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.”

RTR first revealed a restructuring plan as part of its Q2 financial report in 2022, in which it stated it would see total reductions of approximately 24 percent of corporate employees.

The plan was estimated to be complete by the end 2022 and was to also include a reorganisation of functions and reallocation of resources in a bid to reduce costs and streamline its structure.

The rental firm reported a 31 percent increase in revenue for Q3, beating expectations and narrowing its net loss to 36.1 million dollars from 87.8 million dollars a year earlier.

Rent The Runway