InnVest amends tender offer for convertibles, increases purchase price

By Toni Weeks

San Luis Obispo, Calif., July 14 – InnVest Real Estate Investment Trust said it will increase the purchase price for the tender offer for up to C$28.75 million of series G convertible unsecured subordinated debentures to C$1,080 per C$1,000 principal amount from C$1,060, plus any accrued interest.

The offer now represents a premium of C$60 to the closing price of C$1,020 on the Toronto Stock Exchange on June 16 and a premium of about C$64 to the volume-weighted average trading price of C$1,016 on the exchange for the 20 trading days ended June 16, in each case per C$1,000 principal amount, according to a company press release.

The company also is amending the conversion price for each InnVest unit to be issued upon conversion of the debentures. The new conversion price will be C$7.50 rather than C$8.00 as previously announced.

In order to allow holders of the debentures enough time to consider the enhancements to the offer, InnVest has postponed its planned meeting of debentureholders to July 25 from July 22. Similarly, the offer deadline has been extended to July 30 from July 25. The record date for determining the debentureholders entitled to vote at the meeting remains June 18.

At the meeting, InnVest is seeking approval of an extraordinary resolution to permit amendments to the notes indenture, which would

• Increase the coupon to 6.25% from 5.75%, effective as of the beginning of the next interest accrual period on Sept. 30; and

• Increase the conversion price for each InnVest unit to be issued upon the conversion of one series G debenture from C$5.80 per unit.

The trust units closed at C$5.01 (Toronto: INN.UN) on June 16.

As noted before, the tender offer is conditioned on approval of the amendments at the meeting, which requires votes in favor of the measure from holders representing at least 66 2/3% of the notes.

According to a press release, two Canadian institutional investors who hold a total of C$10 million in principal amount of debentures have agreed to vote in favor of the indenture amendments.

InnVest is seeking to maintain financial flexibility to pursue its investment strategy and to build value for its unitholders, the release noted.

“The excess cash from identified non-strategic dispositions allows for InnVest to lower its leverage by canceling debentures under the offer, while the proposed indenture amendments will allow for an improved income return to debentureholders without changing the credit terms and reduces potential dilution to unitholders,” a previous press release stated.

InnVest is a Toronto-based holder of hotel real estate.

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