The 9 1/2% issuance is an add-on to an existing $500 million that mature in 2008. "The $96 million of net proceeds will provide FelCor with greater flexibility and better position...during the current uncertain political and economic conditions," CFO Richard J. O'Brien says in a press release.

The "better position" undoubtedly relates to FelCor's desire to take advantage of market opportunities as a result of the severe lodging downturn–a calculated move arising from its canceled $2.7-billion takeover of Washington, DC-based MeriStar Hotels & Resorts and information that surfaced during its third-quarter conference call. In mid-November, FelCor amended certain terms of its $615 million unsecured credit line, pushing a "relaxation" of certain financial covenants through Sept. 30, 2002. FelCor officials say the latest action completes the strategy's second phase and builds in flexibility that ultimately will benefit shareholders.

Deutsche Banc Alex. Brown and JP Morgan acted as joint book-running managers. Banc of America Securities LLC, Morgan Stanley and Salomon Smith Barney acted as co-managers.