By Jennifer Chiou and Rebecca Melvin
New York, March 15 - RAIT Financial Trust priced $100 million of 20-year convertible senior notes to yield 7% with an initial conversion premium of 9.87%.
The yield came wide of talk - 5.75% to 6.25%. The expected initial conversion premium was 17.5% to 22.5%, according to a market source on Monday.
There is a $15 million greenshoe for the registered offering, which is being sold via bookrunner Bank of America Merrill Lynch.
The notes have an initial conversion price of $2.56 per share for a conversion rate of 390.1677 RAIT common shares per $1,000 principal amount of notes.
The notes are non-callable for five years, with puts in years five, 10 and 15. There is contingent conversion if shares rise to 130% of the conversion price.
There is full dividend protection via a conversion rate adjustment and change-of-control protection.
As previously reported, RAIT intends to use the proceeds to repay debt and for general trust purposes, including working capital. Specifically, $75 million of the proceeds are earmarked for the repurchase of some of its 6.875% convertibles.
Philadelphia-based RAIT is a real estate investment trust focused on properties in Philadelphia and in the Baltimore to Washington, D.C., corridor.
| Issuer: | RAIT Financial Trust
|
| Issue: | Convertible senior notes
|
| Amount: | $100 million
|
| Greenshoe: | $15 million
|
| Maturity: | 2031
|
| Bookrunner: | Bank of America Merrill Lynch
|
| Coupon: | 7%
|
| Conversion premium: | 9.87%
|
| Conversion price: | $2.56
|
| Conversion ratio: | 390.1677
|
| Calls: | Non-callable for five years; puts in years five, 10 and 15; contingent conversion if shares rise to 130% of the conversion price
|
| Takeover protection: | Yes
|
| Dividend protection: | Yes
|
| Price talk: | 5.75% to 6.25%, up 17.5% to 22.5%
|
| Pricing date: | March 15
|
| Settlement date: | March 21
|
| Stock symbol: | NYSE: RAS
|
| Stock reference price: | $2.33 at close March 15
|
| Market capitalization: | $258.51 million
|
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