iStar wraps private exchange offers for 16 notes series, will issue new second-lien notes

By Jennifer Chiou

New York, May 7 - iStar Financial Inc. announced the completion of the private offers to issue up to $1 billion principal amount of new second-lien senior secured notes in exchange for a portion of its existing senior unsecured notes.

The company said that holders tendered $163.4 million of priority 1 notes in exchange for 8% second-priority senior secured guaranteed notes due March 2011, $673.9 million of priority 2 notes in exchange for 10% second-priority senior secured guaranteed notes due June 2014 and $176.8 million of priority 3 notes in exchange for the 10% second-priority notes due 2014.

The company also made a cash tender offer for up to $265 million principal amount of its outstanding series B senior floating-rate notes due September 2009. In the offer, holders of about $12.5 million of the floaters tendered their securities.

The company previously increased the consideration to be paid for its first-priority notes in the offer. For each $1,000 principal amount, the company will issue $950, up from $850, of new notes for the $473 million of senior floating-rate notes due March 2010 and $235 million of 5 3/8% senior notes due April 2010.

Notes eligible for exchange, their acceptance priority level, the principal amount of new notes to be received for each note exchanged and the amount of tendered notes are indicated in the table below.

Tendered notes were accepted in order of priority acceptance level. The company previously said no more than $450 million principal amount of priority 1 notes would be accepted.

The exchange amounts include $30 principal amount of new notes that will only be issued for every $1,000 principal amount of notes tendered by the early delivery time.

Holders will also receive accrued interest up to but excluding the settlement date.

The new notes are senior obligations of the company and are guaranteed by all of its subsidiaries that are guarantors of its new first-lien credit facility and second-lien credit facilities.

The new notes share ratably with the lenders under the second-lien credit facilities in a second-priority lien on the collateral securing the first- and second-lien credit facilities.

A covenant in the credit facilities prohibits iStar from issuing more than $1 billion of new notes.

Tender offer

In the cash tender offer for its series B senior floating-rate notes due September 2009, the amount on offer is $900 per note, which includes a $30 premium for every $1,000 principal amount of notes tendered by the early delivery time.

Holders will also receive accrued interest up to but excluding the settlement date.

If the offer had been oversubscribed, participating holders would have had their notes accepted on a pro rata basis.

The exchange offers and tender offer expired at midnight ET on May 6, and the early delivery time for each offer was 5 p.m. ET on April 22. They began on April 8.

Settlement is set for Friday.

Global Bondholder Services Corp. (866 794-2200 or 212 925-1630) was the information agent.

iStar is a New York-based finance company focused on the commercial real estate industry.

iStar exchange offer

Exchange amount Tendered amount

Priority 1 notes

$473 million senior floating-rate notes due March 2010 $950 $135.96 million

$235 million 5 3/8% senior notes due April 2010 $950 $27.48 million

Priority 2 notes

$680.66 million 8 5/8% senior notes due June 2013 $600 $80.46 million

$780.43 million 5.95% series B senior notes due October 2013 $550 $271.30 million

$123.49 million 6½% senior notes due December 2013 $550 $28.86 million

$290.01 million 5.7% series B senior notes due March 2014 $550 $83.41 million

$1.84 million 5.7% series A senior notes due March 2014 $550 $1.84 million

$179.19 million 6.05% senior notes due April 2015 $550 $73.43 million

$370.49 million 5 7/8% senior notes due March 2016 $500 $79.82 million

$154.51 million 5.85% senior notes due March 2017 $500 $54.78 million

Priority 3 notes

$325.40 million 6% senior notes due December 2010 $700 $23.76 million

$224.50 million 5.8% senior notes due March 2011 $650 $4.24 million

$234.15 million 5 1/8% series B senior notes due April 2011 $650 $22.32 million

$416.02 million 5.65% senior notes due September 2011 $650 $41.877 million

$587.77 million 5.15% senior notes due March 2012 $600 $40.42 million

$230.70 million 5½% senior notes due June 2012 $600 $44.22 million

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