Rent the Runway announces debt restructuring and new investment

Rent the Runway, a fashion rental company, has announced a "growth recapitalization" transaction that is expected to significantly strengthen its financial position. The deal involves a substantial reduction in the company's debt, a decrease in interest expenses, and a favourable maturity extension on its remaining debt.

As part of the recapitalization, its existing debt holder, APS, will convert a significant portion of its debt into common equity. APS, along with new partners Story3 and Nexus, will also contribute an additional 20 million dollars in new capital to support the business. Peter Comisar of Story3 and Damian Giangiacomo of Nexus will join Rent the Runway's Board of Directors after the transaction is completed.

Upon the transaction's closing, which is expected by December 31, 2025, Rent the Runway's outstanding debt balance will be reduced to 120 million dollars, and its maturity will be extended to 2029. The company will continue to operate as a public company and trade on Nasdaq under the ticker symbol RENT.

CEO Jennifer Hyman stated that the company has made great progress over the past 18 months, achieving near cash flow breakeven in 2024 and returning to "a culture of customer obsession, which is driving meaningful customer growth". She noted that the new partnership will allow the company to grow in a more "sustainable, healthy way" and take advantage of the expanding rental market.

As part of the deal, the company will also initiate a rights offering to allow existing stockholders to purchase up to 12.5 million dollars of shares at a price of 4.08 dollars per share, a 20 percent discount to the recent 30-day volume weighted average price. The rights offering is fully backstopped by APS, Story3, and Nexus.

The company ended the first quarter of 2025 with a record high of 147,000 active subscribers and its strongest quarterly customer retention in four years.