FelCor $50 million add-on to 7.8% perpetual convertible preferred talked at 8.25%-8.375% yield

Nashville, Aug. 18 - FelCor Lodging Trust Inc. on Wednesday launched a $50 million add-on to its series A 7.8% perpetual convertible preferreds to price at a discount to the $25 par to yield 8.25% to 8.375%.

Bear Stearns & Co. and Citigroup Global Markets Inc. are joint lead managers of the deal, which was slated to price after the market close.

In March, the Irving, Texas, hotel real estate investment trust also sold a $115 million add-on to the issue at $23.79 to yield 8.375%. On that issue, dividend payments were set at the greater of 7.8% per year or the cash distributions on the underlying shares.

The conversion price on the issue is $32.25 with a 0.7752 conversion ratio.

The issue is non-callable unless FelCor shares are above $32.35.

FelCor shares closed Tuesday at $11.32.

Standard & Poor's rates the issue at CCC and Moody's at B3.

A $7.5 million greenshoe is available.

Proceeds, which FelCor estimated at about $46 million before any exercise of the greenshoe, are earmarked to be used along with excess cash to retire at least $50 million of FelCor's 9.5% senior notes due 2008.

FelCor owns a number of Embassy Suites Hotels, Crowne Plaza, Holiday Inn and independently owned Doubletree-branded hotels, as well as a 50% interest in five hotels not included in consolidated operations as of Dec. 31. At Dec. 31, the company had a portfolio of 161 hotels with nearly 45,000 rooms.

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