UBS to price call warrants linked to index basket

By Angela McDaniels

Seattle, April 4 - UBS AG plans to price an offering of call warrants linked to a basket of indexes, according to a 424B2 filing with the Securities and Exchange Commission.

The basket will contain the S&P 500 index with a 33.34% weight, the Dow Jones Euro Stoxx 50 index with a 33.33% weight and the Nikkei 225 index with a 33.33% weight.

The warrants are expected to expire on April 21, 2011. The exact expiration will be set at pricing, which is expected to be April 24.

The warrants will be automatically exercised on the expiration date if the final basket level is greater than the initial basket level. Investors will receive the notional amount of between $62.50 and $68.97 per warrant multiplied by the return on the basket.

The notional amount will equal the issue price of $10.00 per warrant divided by the warrant premium, which will be between 14.5% and 16%. Therefore, investors will lose part of their investment in the warrants if the basket return is positive but less than the warrant premium.

If the final basket level is less than or equal to the initial basket level, the warrants will expire worthless and investors will lose their entire investments. Investors may not exercise their warrants prior to the expiration date.

UBS Investment Bank and UBS Financial Services Inc. will underwrite the offering and will receive a discount of 4.69% to 5.17%.

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