The RealReal Strengthens Capital Structure and Reduces Total Debt Through Add-on Debt Exchange Transactions

Rhea-AI Summary

The RealReal (NASDAQ:REAL), the leading online marketplace for authenticated luxury resale goods, has announced strategic debt exchange transactions to strengthen its capital structure. The company is exchanging approximately $49.5 million of its 1.00% Convertible Senior Notes due 2028 for 4.00% Convertible Senior Notes due 2031.

This transaction reduces The RealReal's total debt by over $6 million and extends significant 2028 maturities to 2031. Following the exchange, less than $50 million of the 2028 Notes will remain outstanding. The new consolidated 2031 Notes will total $190.079 million. Since early 2024, the company has reduced its total indebtedness by over $86 million.

Positive

• None.

Negative

• Higher interest rate on new notes (4.00% vs 1.00% on original notes)
• Still maintains significant debt load with $190.079 million in 2031 Notes

Insights

Corporate Finance Specialist

The RealReal's $49.5M debt exchange reduces total debt by $6M and extends maturities, strengthening its financial flexibility.

The RealReal has executed a strategic debt restructuring that accomplishes three key objectives simultaneously. First, the company has reduced its $6 million in total debt, representing the continuation of a significant deleveraging effort that has cut $86 million from their debt load since early 2024. Second, they've extended the maturity timeline by converting $49.5 million of their 2028 notes to 2031 notes, giving management additional breathing room.

The structure of this transaction is particularly noteworthy. The company is exchanging $49.5 million of 1.00% Convertible Senior Notes due in 2028 for 4.00% Convertible Senior Notes maturing in 2031. While this increases the interest rate, the benefit of extending maturities often outweighs higher coupon costs in cash flow management. This transaction leaves less than $50 million of the 2028 Notes outstanding, making the remaining balance more manageable.

For a luxury resale marketplace like The RealReal, balance sheet optimization is crucial. The retail luxury sector faces periodic volatility, and by reducing debt obligations and extending maturities, the company has increased its financial resilience. The $190 million combined 2031 notes now represent the company's primary debt instrument, creating a more streamlined liability structure.

This transaction follows a broader debt reduction strategy that appears to be central to management's financial roadmap. For investors, this represents a disciplined approach to capital structure that should improve financial stability without diluting equity holders through stock issuances.

SAN FRANCISCO, Aug. 21, 2025 (GLOBE NEWSWIRE) -- The RealReal (Nasdaq: REAL) (the “Company”)—the world’s largest online marketplace for authenticated, resale luxury goods—today announced its entry into additional strategic debt exchange transactions with certain holders of its 1.00% Convertible Senior Notes due 2028 (the “2028 Notes”) for additional 4.00% Convertible Senior Notes due 2031 (the “Additional Notes”), reducing its total indebtedness by over $6 million and extending a significant portion of its remaining 2028 maturities to 2031. Following the exchange of approximately $49.5 million aggregate principal amount of the 2028 Notes in connection with these transactions, less than $50.0 million aggregate principal amount of the 2028 Notes will remain outstanding.

The Additional Notes, together with the $146,685,000 of 4.00% Convertible Senior Notes due 2031 previously issued by the Company on February 10, 2025, will form a single class of $190,079,000 aggregate principal amount of 4.00% Convertible Senior Notes due 2031. These private, separately negotiated debt exchange transactions will be conducted in transactions exempt from registration under the Securities Act of 1933, as amended.

Rati Levesque, President and Chief Executive Officer of The RealReal, stated, “We're pleased with the transactions we announced today, which reinforce our commitment to strengthening our balance sheet and reducing our debt. With this debt exchange, we have reduced our total indebtedness by over $86 million since the beginning of 2024 and favorably rebalanced our debt maturity cycle. This transaction enhances our flexibility to address the remainder of our 2028 convertible debt. We believe that we remain well-positioned to execute on our strategic pillars and continue to deliver profitable growth.”

Moelis & Company LLC is serving as financial advisor, and Wachtell, Lipton, Rosen & Katz is serving as legal counsel to The RealReal in connection with the Exchange Transactions.

About The RealReal Inc.
The RealReal is the world’s largest online marketplace for authenticated, resale luxury goods, with more than 40 million members. With a rigorous authentication process overseen by experts, The RealReal provides a safe and reliable platform for consumers to buy and sell their luxury items. We have hundreds of in-house gemologists, horologists and brand authenticators who inspect thousands of items each day. As a sustainable company, we give new life to pieces by thousands of brands across numerous categories—including women's and men's fashion, fine jewelry and watches, art and home—in support of the circular economy. We make selling effortless with free virtual appointments, in-home pickup, drop-off and direct shipping. We handle all of the work for consignors, including authenticating, using AI and machine learning to determine optimal pricing, photographing and listing their items, as well as shipping and customer service.

Investor Relations Contact:
Caitlin Howe
IR@therealreal.com

Press Contact:
Mallory Johnston
PR@therealreal.com

Forward-Looking Statements

This press release contains forward-looking statements relating to, among other things, the future performance of The RealReal that are based on the Company's current expectations, forecasts and assumptions and involve risks and uncertainties. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “expect,” “plan,” anticipate,” target,” “contemplate,” “project,” “believe,” “estimate,” “predict,” “intend,” “potential,” “continue,” “ongoing” or the negative of these terms or other comparable terminology. These statements include, but are not limited to, statements about future operating and financial results, including our strategies, plans, commitments, objectives and goals, in particular in the context of the recent geopolitical events, and uncertainty surrounding macroeconomic trends, financial guidance, anticipated growth in 2025, the anticipated impact of generative AI, and medium-term goals and projections. Actual results could differ materially from those predicted or implied and reported results should not be considered as an indication of future performance. Other factors that could cause or contribute to such differences include, but are not limited to, inflation, macroeconomic uncertainty, geopolitical instability, any failure to generate a supply of consigned goods, pricing pressure on the consignment market resulting from discounting in the market for new goods, failure to efficiently and effectively operate our merchandising and fulfillment operations, labor shortages and other reasons.

More information about factors that could affect the Company's operating results is included under the captions “Risk Factors” and “Management's Discussion and Analysis of Financial Condition and Results of Operations” in the Company's most recent Annual Report on Form 10-K for the year ended December 31, 2024 and subsequent Quarterly Reports on Form 10-Q, copies of which may be obtained by visiting the Company's Investor Relations website at https://investor.therealreal.com or the SEC's website at www.sec.gov. Undue reliance should not be placed on the forward-looking statements in this press release, which are based on information available to the Company on the date hereof. The Company assumes no obligation to update such statements.

FAQ

How much debt did The RealReal (REAL) reduce through its latest exchange transaction?

The RealReal reduced its total indebtedness by over $6 million through the latest exchange transaction, and has reduced total debt by over $86 million since early 2024.

What are the terms of The RealReal's new 2031 convertible notes?

The new notes are 4.00% Convertible Senior Notes due 2031, with a total aggregate principal amount of $190.079 million, combining both the newly exchanged notes and previously issued notes from February 2025.

How much of The RealReal's 2028 convertible notes remain outstanding after the exchange?

Following the exchange of approximately $49.5 million of the 2028 Notes, less than $50 million aggregate principal amount of the 2028 Notes remain outstanding.

What is the purpose of The RealReal's debt exchange transaction?

The transaction aims to strengthen the company's capital structure by reducing total debt, extending debt maturities from 2028 to 2031, and providing enhanced flexibility to address remaining 2028 convertible debt.