Luminent talks $85 million 20-year convertibles at 7.875%-8.375%, up 20%-25%, to price Wednesday

By Kenneth Lim

Boston, May 29 - Luminent Mortgage Capital Inc. plans to price $85 million of 20-year convertible senior unsecured notes on Wednesday after the market closes, talked at a coupon of 7.875% to 8.375% and an initial conversion premium of 20% to 25%.

The convertibles will be offered at par. They will be guaranteed by Luminent subsidiaries Maia Mortgage Finance Statutory Trust, Mercury Mortgage Finance Statutory Trust and Saturn Portfolio Management Inc.

There is an over-allotment option for a further $15 million.

Bear Stearns is the bookrunner of the Rule 144A offering.

The convertibles will be non-callable for the first five years and may be put in years five, 10 and 15.

There will be a contingent conversion trigger at 120% of the conversion price.

The convertibles will have dividend and takeover protection.

Luminent, a San Francisco-based real estate investment trust that invests in mortgage-backed securities and loans, said it will use the proceeds of the deal to concurrently buy back up to $25 million of its common stock and fund general purposes.

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