Developers Diversified talks $400 mln five-year convertibles at 2.75%-3.25%, up 20%, reoffered at 98.5

By Kenneth Lim

Boston, March 6 - Developers Diversified Realty Corp. plans to price $400 million of five-year convertible senior notes on Wednesday after the market closes, talked at a coupon of 2.75% to 3.25%, an initial conversion premium of 20% and reoffered at 98.5.

There is an over-allotment option for a further $60 million.

Banc of America, JP Morgan and Wachovia are the bookrunners of the Rule 144A offering.

The notes will be non-callable.

There will be a contingent conversion trigger at 125% of the conversion price.

The notes will have dividend and takeover protection.

There will be a net-share settlement feature.

Developers Diversified, a Beachwood, Ohio-based real estate investment trust that focuses on shopping centers, said it will buy back $75 million of its common stock using the proceeds of the deal. It will also use the proceeds to repay outstanding senior unsecured debt, to fund convertible note hedge transactions and for general purposes.

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