MeriStar overnight $75 million convertibles talked at 9.0-9.5% yield, up 100%

By Ronda Fears

Nashville, June 25 - MeriStar Inc. launched an overnight offering of $75 million seven-year non-callable convertibles talked to yield 9.0% to 9.5% with a 100% initial conversion premium via lead manager Lehman Brothers.

The subordinated notes are expected to be rated Caa1 by Moody's Investors Service and CCC by Standard & Poor's Corp.

There is a 15% greenshoe available.

The Washington, D.C.-based real estate investment trust, which owns upscale hotels and resorts, plans to use proceeds to redeem its 4.75% convertible due 2004.

MeriStar's 4.75s were quoted at 86.375 bid, 89.375 offered.

MeriStar shares closed up 7c, or 1.39%, to $5.09.

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