Forest City to price $175 million seven-year convertibles to yield 5%-5.5%, up 22.5%-27.5%

By Rebecca Melvin

New York, Oct. 19 - Forest City Enterprises Inc. plans to price $175 million of seven-year convertibles after the close of markets on Tuesday to yield 5% to 5.5% with an initial conversion premium of 22.5% to 27.5%, according to a market source.

The Rule 144A transaction has a $25 million greenshoe.

The convertible senior notes will be non-callable for life and will be accompanied by a convertible note hedge transaction.

Proceeds will be used to reduce outstanding borrowings under a $750 million revolving credit facility, to repay debt, to fund existing development projects and for general corporate purposes. A portion of the proceeds from the sale will be used to cover the cost of the convertible note hedge transactions.

Cleveland-based Forest City owns, develops, manages and acquires commercial and residential real estate properties.

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