All that is necessary for Friedman to receive this payout is the financial engineering and ongoing reduction of share count coupled with even just very slight improvements in RHs business (in fact, whether real or perceived). Friedman did not waste any time in putting his plan into action.

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Sec stock option backdating cases video

The share price has already nearly doubled since those purchases.

Because of its increased leverage, the market has been very focused on RHs “capital structure”. As a result, when RH suddenly announced three weeks ago that it was already paying down its $100 million second lien term loan (within just 3 months of it being issued), the stock quickly shot up 20 points from the $70s to the $90s, quickly hitting new 52 week highs.

What I will describe below is how Friedman is now using a combination of positive cash flow and new debt to further reduce the share count.

Friedman is effectively conducting a “stealth/quasi/creeping” going private in order to drastically reduce share count.

Ultimately, for Friedman to take home his nine figure package, the equity float must go lower. The impact on the share price is entirely predictable.

Throughout 2017, RH has already repurchased half of its outstanding float at an average price of .45.

Some were surprised at the buyback because RH’s stock price had already been rising towards the highest prices of the year (then closing in on ).

Even more surprising (to some) was that within just 50 trading days, RH had announced that it had already , accounting for a significant portion of the daily volume during that time.

And now suddenly these conversion prices are quite squarely within range.