By Angela McDaniels
Tacoma, Wash., March 25 - RAIT Financial Trust issued a note, cash and shares in exchange for $47 million of its outstanding 6.875% convertible senior notes due 2027 held by United Equities Commodities Co., according to an 8-K filing with the Securities and Exchange Commission.
United Equities received a $22 million 10% senior secured convertible note due April 20, 2014, 1.5 million RAIT common shares of beneficial interest and $6 million in cash.
Based on RAIT's closing share price of $2.16 (NYSE: RAS) on Wednesday, the combined value of the note, shares and cash is $31.24 million.
RAIT also paid accrued interest on the 6.875% convertibles up to but excluding the closing date of the transaction, which was Thursday.
Interest on the new convertible is payable quarterly.
The new note is convertible into RAIT shares at the rate of one share for every $3.50 principal amount of the note converted.
United Equities may not receive shares upon a conversion that would cause it, together with its affiliates, to own more than 8.3% of RAIT's outstanding shares.
The new convertible is guaranteed by subsidiaries RAIT Asset Holdings III Member, LLC and RAIT Asset Holdings III, LLC.
The company expects the transaction to reduce its cash requirements for interest payments by approximately $1 million per year, to reduce its recourse debt by $25 million and to generate a gain on the extinguishment of debt of approximately $15 million for the quarter ending March 31.
RAIT is a Philadelphia-based real estate investment trust that provides debt financing to the real estate industry.
| Issuer: | RAIT Financial Trust
|
| Issue: | Senior secured convertible note
|
| Amount: | $22 million
|
| Maturity: | April 20, 2014
|
| Coupon: | 10%, payable quarterly
|
| Price: | Par
|
| Conversion price: | $3.50
|
| Settlement date: | March 25
|
| Stock symbol: | NYSE: RAS
|
| Stock price: | $2.16 at close March 24
|
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