Retail Ventures, Inc. announced that its wholly-owned subsidiary, Value City Department Stores LLC (Value City), repaid its $100 million term loan facility in full, $25 million under its $75 million convertible loan facility and approximately $120 million under its revolving credit facility. On an annual basis Retail Ventures expects to reduce its interest expense by approximately $22 million per year as a result of these repayments.
Retail Ventures also announced that its subsidiary, DSW Inc., completed its initial public offering of 16,171,875 Class A common shares at $19 per share. DSW used a portion of the proceeds to repay intercompany indebtedness owed to Retail Ventures. DSW's Class A common shares trade on the New York Stock Exchange under the ticker symbol “DSW.” After the offering, Retail Ventures will own approximately 63.0% of DSW's outstanding common shares and approximately 93.2% of the combined voting power of such shares.
In connection with these transactions, Retail Ventures replaced its $75 million convertible loan facility with a $50 million senior loan facility and warrants to its senior loan lenders providing them the right to acquire 16,666,667 Retail Ventures common shares. The warrants are exercisable for Retail Ventures common shares at the $4.50 per share conversion price as was provided under the convertible loan facility. In addition, Retail Ventures has amended its outstanding warrants that provided holders the right to acquire 2,954,792 Retail Ventures common shares. These warrants and the warrants to the senior loan lenders may also be exercised for DSW Class A common shares held by Retail Ventures at an exercise price of $19.00 per share (the price of the shares in DSW's initial public offering) or a combination of Retail Ventures and DSW shares. If warrantholders exercise their warrants for DSW shares, it is Retail Ventures' obligation, not DSW's, to deliver them Class A common shares. Consequently, if Retail Ventures delivers Class A common shares to warrantholders, its ownership interest in DSW would decrease. In aggregate, warrantholders could exercise their warrants for 4,647,189 DSW Class A common shares.
