Sotheby's pricing of $150 million five-year convertibles seen Thursday

By Rebecca Melvin

New York, June 10 - Sotheby's plans to price $150 million of five-year senior unsecured convertible notes on Thursday, with indicated price information expected to be available on Wednesday, according to a market source.

Concurrently, Sotheby's plans to price an offering of $150 million of seven-year senior unsecured notes.

The Rule 144A convertibles offering is being sold via bookrunners Banc of America Securities LLC and Goldman Sachs.

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

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

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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