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BOCA RATON, FL-Locally based Bluegreen Corp. exercises its option to repurchase $55 million of its 10.5% senior secured notes due in 2008 at a redemption cost of 101.75%, plus accrued and unpaid interest through June 26. On the June 27 redemption date, that accrued and unpaid interest will total approximately $1.4 million.

Sun Trust Bank is the trustee and paying agent of the notes. This portion represents half of Bluegreen’s 10.5% senior notes and leaves approximately $55 million of them outstanding.

The developer and owner of resorts and timeshare communities is funding the redemption with proceeds from its issue of trust preferred securities. So far this year, its wholly owned statutory business trusts have issued an aggregate of $57.5 million in trust preferred securities. The proceeds along with Bluegreen’s capital contributions to the trusts, were used to acquire $59.3 million of junior subordinated debentures from the company.

Interest on the junior subordinated debentures and distributions on the trust preferred securities will be payable in arrears at fixed rates of approximately 9.2% for five years. After that, interest is at a floating rate ranging from 4.85% to 4.9% over three-month Libor until 2035, when the principal amount will be due. Bluegreen’s prepayment penalty is approximately $962,500, and the cost related to the redemption is estimated at $750,000.

“By utilizing the proceeds from the trust preferred securities, we are able to opportunistically refinance half of our senior note debt at a more attractive rate of interest and also extend the maturity of this debt from 2008 to 2035,” says George F. Donovan, president and CEO, in a statement. The company expects to create similar trusts and participate in other preferred securities transactions in the future, subject to market conditions, as a source of additional financing or debt repayment.

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