Sotheby's to price $150 million five-year convertibles

By Rebecca Melvin

New York, June 9 - Sotheby's plans to price $150 million of five-year senior unsecured convertible notes concurrent with an offering of $150 million of seven-year senior unsecured notes, according to a news release.

No price talk was available on the Rule 144A offering late Monday.

Banc of America Securities LLC and Goldman Sachs & Co. are bookrunners of the convertible offering, according to a market source.

Proceeds are earmarked to finance the acquisition of Sotheby's York Avenue property and to redeem its $100 million of existing 6.875% notes due 2009.

In addition, Sotheby's expects to use a portion of the proceeds from the transactions and from warrant transactions to fund convertible note hedge transactions that will have an exercise price equal to the conversion price of the convertible notes.

Sotheby's also expects to enter into warrant transactions with the same counterparties. The warrant transactions could have a dilutive effect on Sotheby's earnings per share to the extent that the price of Sotheby's common stock exceeds the strike price of the warrants. Any remaining proceeds will be used for general corporate purposes.

New York-based Sotheby's is an art auction and art-related financing company.

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