Equity Office launches consent solicitation for 4% exchangeables

By Laura Lutz

Washington, Dec. 27 - Equity Office Properties Trust announced that its subsidiary EOP Operating LP began soliciting consents to amend its $1.5 billion outstanding principal amount of 4% exchangeable senior notes due 2026.

The consent solicitation for the 4% notes is being conducted in connection with the company's previously announced merger agreement with affiliates of the Blackstone Group.

The proposed amendments to the note indenture would eliminate substantially all of the restrictive covenants, eliminate some events of default and modify some provisions, including covenants related to mergers and consolidations.

The amendments would also terminate the obligations of Equity Office and EOP under the registration rights agreement related to the notes, except for obligations to pay liquidated damages upon registration defaults and to indemnify holders in some situations.

The company will pay consenting noteholders $1.25 per $1,000 principal amount of notes.

The solicitation expires at 5 p.m. ET on Jan. 9.

Consents may not be revoked after the company receives consents from holders of a majority of the notes.

Settlement of the solicitation is subject to conditions including the receipt of needed consents, the completion of the merger and the satisfaction of the change of control condition, which would trigger the make-whole provisions of the indenture.

Assuming that the mergers close on Feb. 8, the exchange rate for the following 30 business days is expected to be 24.82 shares per $1,000 principal amount, so holders exchanging notes in that time would receive $1,203.77 in cash per $1,000 principal amount of notes.

Concurrently, EOP is conducting tender offers and consent solicitations for $8.4 billion of its unsecured debt securities.

The consent solicitation for the 4% notes and the other tender offers and consent solicitations are not conditioned on each other.

Goldman, Sachs & Co. (877 686-5059 or collect 212 357-0775) and Merrill Lynch, Pierce, Fenner & Smith Inc. (888 654-8637 or 212 449-4914) will act as lead agents for the consent solicitation. Banc of America Securities LLC; Bear, Stearns & Co. Inc.; Citigroup Global Markets Inc.; Deutsche Bank Securities Inc.; and Morgan Stanley & Co. Inc. are also acting as solicitation agents.

Global Bondholder Services Corp. (212 430-3774 or 866 924-2200) is the information agent.

Chicago-based Equity Office owns and manages commercial properties.

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