Five Star Quality retires $1.9 million 3.75% convertibles in quarter

By Susanna Moon

Chicago, Feb. 19 - Five Star Quality Care, Inc. retired $1.9 million par value of its 3.75% convertible senior notes due 2026 in the fourth quarter, according to a 10-K filing with the Securities and Exchange Commission.

The company said in the filing that it purchased $76.8 million of the convertibles in 2009 for $39.9 million plus accrued interest.

The company bought $74.9 million of the notes in the first nine months of 2009 for $38.5 million plus accrued interest, according to its 10-Q filing for the quarter ended Sept. 30, 2009.

Funding for the purchases came from borrowings under its UBS credit facility, cash from operations and with proceeds from senior housing under the lease realignment agreement.

As a result of the purchases, the company said it recorded a gain of $34.6 million on early extinguishment of debt.

The notes were issued in October 2006. There is $49.7 million principal amount of the notes outstanding.

Five Star said on Nov. 4, 2009 that it purchased $15.6 million of the convertibles during the third quarter of 2009 for $12.2 million plus accrued interest.

In October 2009, the company said it retired $800,000 par value of the notes at a cost of $637,500 plus accrued interest.

Five Star is a senior living and health care services company based in Newton, Mass.

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