Avatar $75 million convertible talked at 4.0-4.5%, up 38-42%

By Ronda Fears

Nashville, March 23 - Avatar Holding Inc. launched $75 million of convertible senior notes talked to yield 4.0% to 4.5% with a 38% to 42% initial conversion premium.

Citigroup Global Markets Inc. is sole bookrunner of the Rule 144A/Regulation S deal, which is slated to price after Wednesday's close.

The issue will be non-callable for seven years, with puts in years seven, 10 and 15.

There is a 120% contingent conversion trigger.

A $20 million greenshoe is available.

Avatar said it would use 40% of proceeds to purchase shares from purchasers of the notes, which is an authorized increase from the $26.4 million balance in the company's standard stock buyback program. The company said remaining proceeds will be used for general corporate purposes.

Based in Coral Gables, Fl., Avatar is a real estate development company.

Last November, the company said holders of $20.7 million of its 7% convertible subordinated notes due 2005 converted their notes into 650,378 shares of common stock ahead of a cash redemption. The other $13.4 million of the issue were redeemed for cash at 102 plus accrued interest. The notes were convertible at a price of $31.80 per share.

Avatar shares closed Tuesday up 18 cents, or 0.46%, to $38.89.

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