Equity Office to price $1 billion 20-year convertibles talked to yield 3.75%-4%, up 18%-22%

By Rebecca Melvin

Princeton, N.J., June 21 - Equity Office Properties Trust said Wednesday that a subsidiary plans to price $1 billion of exchangeable senior notes, which were talked to yield 3.75% to 4% with an initial conversion premium of 18% to 22%.

The notes are expected to price Thursday after the close.

The notes will be senior unsecured obligations of the subsidiary, EOP Operating LP.

There is an additional $150 million, or 15%, over-allotment option on the notes, which will become due 2026.

Merrill Lynch is the lead of four bookrunners, including Banc of America, Wachovia and UBS Investment Bank.

The exchangeables have 5.5-year call protection and a 5.5-year put.

Proceeds are expected to be used to buy back $450 million worth of common stock concurrently with the offering's close. The remainder is for general corporate purposes.

Equity Office (NYSE: EOP) is a Chicago-based office building real estate investment trust.

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