By Kenneth Lim
Oct. 5 - Forest City Enterprises Inc. on Wednesday priced $250 million of five-year putable equity-linked senior notes at the cheap end of talk, with a coupon of 3.625% and an initial conversion premium of 25%.
The deal was talked at 3.125% to 3.625% and an initial conversion premium of 25% to 30%. The notes are essentially convertible securities, but are described as "putable equity-linked" securities to accommodate the company's high-yield indentures, market sources said.
There is a greenshoe option for a further $37.5 million.
Goldman Sachs was the bookrunner of the Rule 144A deal.
The notes are convertible into Forest City's class A common stock.
They are non-callable for life, and there are no investor puts.
The notes have dividend protection in the form of a rate adjustment for quarterly cash dividends above 7 cents per share, and they have takeover protection.
There is a net-share settlement option.
Forest City, a Cleveland-based real estate developer, said it will use the proceeds of the deal to fund note hedge and warrant transactions and to buy back up to $25 million of its class A common stock. It will also repay recourse debt outstanding under its $600 million revolving loan, and for general corporate purposes.
| Issuer: | Forest City Enterprises Inc.
|
| Issue: | Putable equity-linked senior notes
|
| Bookrunner: | Goldman Sachs
|
| Amount: | $250 million
|
| Greenshoe: | $37.5 million
|
| Maturity: | Oct. 15, 2011
|
| Coupon: | 3.625%
|
| Price: | Par
|
| Yield: | 3.625%
|
| Conversion premium: | 25%
|
| Conversion price: | $66.39
|
| Conversion ratio: | 15.0631
|
| Net-share settlement option: | Yes
|
| Dividend protection: | Conversion ratios adjustment if quarterly common dividend exceeds 7 cents per share
|
| Takeover protection: | Yes
|
| Call protection: | Non-callable for life
|
| Price talk: | 3.125%-3.625%, up 25%-30%
|
| Pricing date: | Oct. 4 after the close
|
| Settlement date: | Oct. 10
|
| Distribution: | Rule 144A
|
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