Forest City greenshoe ups 3.635% convertibles to $287.5 million

By Laura Lutz

Oct. 16 - Forest City Enterprises Inc. announced the full exercise of the greenshoe in its offering of 3.625% convertibles, increasing the total deal size to $287.5 million.

The deal priced on Oct. 5 as a $250 million offering with a $37.5 million greenshoe.

The five-year convertibles have an initial conversion premium of 25%.

As previously reported, the notes are essentially convertible securities, but they are described as "putable equity-linked" securities to accommodate the company's high-yield indentures, market sources said when the offering priced.

There is a contingent conversion hurdle at 130% of the conversion price.

The notes are convertible into Forest City's class A common stock.

They are non-callable for life, and there are no investor puts.

Forest City, a Cleveland-based real estate developer, said it used $25 million of the proceeds to buy back a portion of its class A common stock. The company said it would use the remaining proceeds to repay approximately $190 million of recourse debt outstanding under the Company's $600 million bank revolving credit facility and for general corporate purposes.

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