Rent the Runway (NASDAQ:RENT) surged 20% after unveiling a major growth recapitalization aimed at reducing debt and fueling expansion.
Under the plan, Aranda Principal Strategies (APS) will convert approximately $243 million of debt into common equity at $9.23 per share, marking an 80.9% premium to the recent 30-day average price of $5.10. The recapitalization also brings in $20 million in new capital from APS, STORY3 Capital Partners, and Nexus Capital Management to support growth initiatives. Following the transaction, Rent the Runway’s total debt will drop to $120 million, with maturities extended to 2029.
CEO and Co-founder Jennifer Hyman said, “Over the past 18 months, we’ve significantly strengthened the business, bringing it nearly to free cash flow breakeven in 2024. This partnership positions us to grow in a more sustainable and healthy way.”
The company plans to continue executing its multi-year transformation strategy, focusing on expanding its customer base and improving its platform. Rent the Runway ended Q1 2025 with 147,000 active subscribers, achieving its highest quarterly customer retention in four years.
As part of the deal, existing shareholders will have the opportunity to purchase up to $12.5 million of shares at $4.08 each through a rights offering, a 20% discount to the recent trading price.
The transaction, which requires stockholder approval, is expected to close by December 31, 2025. Upon completion, Peter Comisar of STORY3 and Damian Giangiacomo of Nexus will join Rent the Runway’s Board of Directors.
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