Forestar Group to sell $110 million seven-year convertibles to yield 3.5%-4%, up 32.5%-37.5%

By Rebecca Melvin

New York, Feb. 19 - Forestar Group Inc. planned to price $110 million of seven-year convertible senior notes after the market close Wednesday that were talked to yield 3.5% to 4% with an initial conversion premium of 32.5% to 37.5%, according to market sources.

The registered, off-the-shelf offering has a $15 million greenshoe and was being sold via bookrunner Goldman Sachs & Co., with KeyBank Capital Markets Inc., JMP Securities LLC, Capital One Southcoast Inc., J.P. Morgan Securities LLC and UBS Securities LLC acting as co-managers.

The notes are non-callable with full dividend protection in the form of a conversion rate adjustment and takeover protection.

The Austin, Texas-based real estate, mineral and fiber resources company said it will use the proceeds to repay outstanding borrowings under its revolving line of credit and for general corporate purposes, including investments in oil and gas exploration, drilling, real estate acquisition and development.

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