By Angela McDaniels
Tacoma, Wash., March 4 - Forest City Enterprises, Inc. issued $220 million of new 7% series A cumulative perpetual convertible preferred stock in a series of privately negotiated transactions, according to a company news release.
Of the total amount, $50 million was issued for cash and $170 million was issued in exchange for $178.7 million principal amount of the company's senior notes.
Holders exchanged $51.2 million of 3.625% putable equity-linked senior notes due 2011, $121.7 million of 7.625% senior notes due 2015 and $5.8 million of 6.5% senior notes due 2017 for $50.7 million, $114.4 million and $4.9 million of convertibles, respectively.
The convertibles have a liquidation preference of $50.00 each.
The initial conversion price is $15.12, which is a 20% premium over the $12.60 (NYSE: FCE-A) closing price of the company's class A common stock on Wednesday.
Prior to March 9, 2013, the company can mandatorily convert the convertibles if the daily volume-weighted average price of its class A stock is 150% of the conversion price or more for 20 out of 30 consecutive trading days. Holders will also receive a make-whole payment.
After March 9, 2013, the convertibles are callable at par at any time.
Forest City expects to use the proceeds from the convertibles to defray costs associated with the exchanges, issuance and related equity call hedge transactions and for general corporate purposes.
The net effect of the equity call hedge transactions, from the company's perspective, is to approximate an effective conversion price of $18.27 per share, a 45% premium.
The closing of the exchanges and the issuance are expected to occur Tuesday.
Forest City is a Cleveland-based real estate company.
Issuer: | Forest City Enterprises, Inc.
|
Issue: | Series A cumulative perpetual convertible preferred stock
|
Amount: | $220 million
|
Maturity: | Perpetual
|
Dividends: | 7%, payable quarterly
|
Price: | Par of $50.00
|
Conversion premium: | 20%
|
Conversion price: | $15.12
|
Conversion ratio: | 3.307
|
Call option: | Mandatorily convertible for first three years subject to 150% hurdle; callable at par any time after March 9, 2013
|
Settlement date: | March 9
|
Stock symbol: | NYSE: FCE-A
|
Stock price: | $12.60 at close on March 3
|
© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere.
For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.