IRVING, TX-FelCor Lodging Trust Inc. is in the market for a $215-million private placement to help fund a $290-million buyout of notes in 2011 and $125 million due in 2007. The buyout offer closes Nov. 14.
FelCor's top executives didn't respond by publication time to an interview request. As a result, the only information is what's available in FelCor's press releases and SEC filings. The REIT and subsidiary FelCor LP plan to court institutional buyers with $215 million in senior floating notes--the pricing and terms of which are still being evaluated. The proceeds will be used for the $290-million buyout of floating-rate, unsecured notes that mature in 2011.
On the flip side of the deal, the REIT and its subsidiary hope to buy another $125 million of notes, tied to a near 7.6% fixed-rate interest, which come due next year. The $290-million pool, maturing in 2011, currently has a 9.57% interest rate, based on the 4.25% float over Libor. Stockholders who plan to sell must also consent to proposed amendments to eliminate covenants and default events.
Shareholders of notes due in 2007 are being offered $1,017.62 per $1,000, including the $20 consent stipend, until close of business Oct. 30. The price dips to $997.62 per $1,000 after that and through Nov. 14. The buyout is being paid for from a proposed senior secured financing subject to the tender offer.
Stakeholders of the senior floating notes due in 2011 are being offered $1,022.73 per share for each $1,000 of principal. The deal includes a $20 premium per $1,000 until Oct. 30 and then dips to $1,002.73 per $1,000 through Nov. 14.
In the press release, FelCor says the tender offer is being funded with proceeds from a proposed private placement of senior debt, cash on hand and its line of credit. The private placement's closing is "a condition to the tender offer for the senior floating rate notes due 2011," according to the release. The New York City-based Merrill Lynch & Co. is the dealer manager and solicitation agent.
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