Why did Regis Corporation (RGS) stock price increase 300%? Why did Regis Corporation stock price increase 300%?

Regis Corporation (NASDAQ:RGS) has seen a massive surge in its stock price growth over the past 24 hours, rising $15.45, or over 300%.

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On June 25, Regis’s stock price rose 304.73% to close at $20.52 during the US trading session, before correcting slightly lower by $0.70 to trade at $19.82 in after-hours trading – still a significant jump from the previous day’s close of just $5.07. June 24th.

But why the sudden increase in Regis’ share price?

Successful refinancing of over $100 million

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Yesterday, the hair care and salon products company announced that it has secured a new line of credit worth $105 million.

“Regis Corporation has entered into a new senior secured credit facility with global asset manager TCW Asset Management Company LLC and Midcap Financial Trust,” the company said in a press release.

“With the transition of the Company’s outstanding letters of credit to the new revolving credit facility, the Company expects to have full access to excess availability over its outstanding letters of credit,” Regis added.

Both the term loan and the company’s new revolving credit facility will mature on June 24, 2029.

The company also said it will update the market on the progress of the refinancing and its details in its fiscal 2024 fourth quarter earnings call, which will take place in August 2024.

Meaning of the news

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This essentially means that the company has refinanced much of its debt. The $105 million will allow Regis to reduce its outstanding debt by more than $80 million, or more than 75%.

Having this much lower debt will mean more money in the pocket for Regis Corporation as well, saving millions in annual cash interest payments, while leaving Regis more money to spend on other investments and business improvements.

Part of a strategic plan

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“This strategic refinancing represents a significant milestone for Regis and the next step in our journey toward long-term sustainable growth and value creation,” Matthew Doctor, CEO and chairman of Regis Corporation, said in the news release.

We have conducted a comprehensive strategic review to address our capital structure and are pleased to have reached a refinancing agreement that will significantly reduce our debt, improve the health of our balance sheet and increase our financial flexibility so we can focus on transforming our our business operations.”

“TCW and Midcap’s investment demonstrates their confidence in the long-term prospects of our business and our ability to increase value for our shareholders,” added Doctor.

“We remain committed to improving the customer experience, implementing new technologies, supporting the stylist and affiliate community, and managing our business expenses.”