Why is the Regis Corporation (RGS) stock price up 300%?

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

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

But why the sudden surge in Regis’s stock price?

Success refinancing of over $100 million

Yesterday, the haircare and hair salons company announced that it has secured a new credit facility 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.

“Upon transition of the company’s outstanding letters of credit to the new revolving credit facility, the Company expects to have full access to the availability in excess of the 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 stated that it will update the market on the progress of the refinancing and its details in its fiscal fourth quarter 2024 earnings call, which will take place in August 2024.

Significance of the news

This, essentially, means that the company has refinanced a large portion of its debt. The $105 million will enable Regis to cut its outstanding debt down by more than $80 million – over 75%.

Having this much less debt will mean more cash in pocket for Regis Corporation too, saving them millions in annual cash interest payments – leaving Regis more to spend on other investments and business improvements.

Part of a strategic plan

“This strategic refinancing is a significant milestone for Regis and the next step on our path towards sustainable long-term growth and value creation,” said Matthew Doctor, Regis Corporation’s CEO and president, on the news.

We conducted a comprehensive strategic review to address our capital structure, and we 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 business operations.”

“The investment from TCW and Midcap is a testament to their confidence in the long-term prospects of our business and our ability to enhance value for our shareholders,” Doctor added.

“We remain committed to improving the customer experience, implementing new technology, supporting the stylist and franchisee community, and managing our corporate expenses.”