FelCor Lodging $100 million add-on series A 7.8% convertible preferred talked at 8.125-8.375%

By Ronda Fears

Nashville, March 29 - FelCor Lodging Trust Inc. launched a $100 million offering of its series A 7.8% perpetual convertible preferreds talked to yield 8.125% to 8.375%. The issue will be sold at a discount to the $25 par for the preferreds.

The issue has a conversion price of $32.25 with a conversion ratio of 0.7752.

Bear Stearns & Co. Inc. and Citigroup Global Markets Inc. are joint bookrunners of the deal, which is scheduled to price after the close Tuesday. Deutsche Bank Securities and Legg Mason Wood Walker Inc. are co-managers.

The issue will be non-callable unless FelCor shares are above the conversion price of $32.25.

Dividend payments will be the greater of 7.8% per year or the cash distributions on the underlying shares.

A $15 million greenshoe is available.

The Irving, Texas, hotel real estate investment trust said proceeds would be used for general corporate purposes, including investments in existing or additional hotel assets, retirement of debt and additional liquidity.

Standard & Poor's assigned a CCC rating to the issue with a stable outlook. Pro forma for the proposed transaction, S&P estimated that preferred stock would amount to 13% of FelCor's capital structure.

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