U.S. Cellular issue 'doing well,' trader says; Hersha prices, fails to stir up much interest

By Stephanie N. Rotondo

Portland, Ore., May 11 - Preferred stock traders continued to be optimistic about United States Cellular Corp.'s recent new issue on Wednesday.

However, the new preferreds traded off a bit from Tuesday levels.

Also in the new issue space, Hersha Hospitality Trust priced its new deal, an upsized offering of 8% perpetual preferreds. But unlike U.S. Cellular, the new issue was not attracting much attention.

U.S. Cellular 'doing well'

A trader said U.S. Cellular's new 6.95% $25-par senior notes were "doing well" in Wednesday trading.

He pegged the issue around $24.95, which was down slightly from Tuesday levels of $24.96.

The upsized $300 million issue came Monday and broke for secondary trading on Tuesday. Proceeds from the offering will be used to redeem the company's 7.5% notes due 2034.

Hersha deal prices

Harrisburg, Pa.-based Hersha Hospitality Trust priced a $100 million offering of 8% series B perpetual cumulative redeemable preferreds on Wednesday.

The deal was originally announced late Tuesday. According to a trader, just 3 million shares were expected to be issued.

"I'm not seeing any markets in it at this time," he said shortly before the deal priced. "[Bank of America Merrill Lynch] is running the books and has no selling group.

"It's a small deal."

The deal has an over-allotment option for $1.5 million of additional preferreds.

The preferreds are callable on or after May 18, 2016. They also have a provision where they can be called within 120 days after a change of control takes place at $25 plus dividends.

The bookrunners were Bank of America Merrill Lynch, Barclays Capital Inc., Morgan Stanley & Co., Inc. and Raymond James & Associates.

Robert W. Baird & Co. Inc. and Deutsche Bank Securities Inc. were co-lead managers.

Co-managers were FBR Capital Markets & Co., Janney Montgomery Scott LLC, JMP Securities LLC and Keefe, Bruyette & Woods Inc.

Proceeds will be contributed to the operating partnership in exchange for preferred partnership interest in the operating partnership.

Andrea Heisinger contributed to this article

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