The new money will used to redeem $60 million of 9.5% senior notes due 2008, leaving a $100-million balance in the REIT's replacement program. The end result will be a 1.5% savings to shareholders when the stock is swapped. The latest sale brought 2.3 million shares to market at $23.22 each at an 8.5% dividend yield.
"There is a lot of demand for our paper," Andrew J. Welch, FelCor's senior vice president and treasurer, tells GlobeSt.com about an offering set up with two million shares and pumped up after the starting bell rang on the sale. The offering allowed up to 15% extra shares to be sold at the discretion of the New York City-headquartered bookrunners and joint lead managers, Citigroup Global Markets Inc. and Bear, Stearns & Co. Inc.
At the onset of last week's sale, it was projected $46 million would be raised and applied to retiring $50 million of the 2008 notes. About two months ago, FelCor raised $115 million or $40 million more than it expected on a market run with the same goal--replacement capital for the 2008 notes.
"We're clearly pleased with where we are so far," Welch says of the back-to-back drives to raise funds to pay down debt, now standing at $1.8 billion or $200 million less than when the year started. He says the net result is the cost of debt, so far, has been lowered by about 50 basis points.
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