UPDATE 1-Restoration Hardware settles shareholder case

(Adds settlement details, dateline)

NEW YORK, June 11 (Reuters) - Home furnisher Restoration Hardware Inc RSTO.O said on Wednesday that it agreed to a $3.7 million shareholder settlement over its plan to be bought by private equity firm Catterton Partners.

The agreement related to a case that alleged Restoration's board precluded Sears Holdings (SHLD.O) from making a tender offer for 5 cents a share more than its agreement with Catterton, the shareholders' law firm Coughlin Stoia Geller Rudman & Robbins LLP said in a statement.

Restoration said the settlement was read into the record on Wednesday at Marin County Court, in California, a day before Restoration shareholders were due to vote the proposed Catterton deal.

Restoration Hardware spokesman Lance Ignon said the company felt it was in the best interests of its shareholders to settle so it could move forward with the deal.

In November, Restoration had agreed to a buyout valued at $6.70 a share, or about $267 million, involving its chief executive and private equity firm Catterton Partners. But in January, it said it accepted a 33 percent lower price for that buyout amid pressure in the home-goods retail sector.

Under the revised management-led buyout, Restoration is due to receive $4.50 a share, or about $175 million, based on about 39 million shares outstanding as of Nov. 28. (Reporting by Sinead Carew)