Strategic Hotels greenshoe fully exercised to raise 3.5% convertibles offer to $180 million

By Jennifer Chiou

New York, April 25 - Strategic Hotels & Resorts Inc. said its $30 million over-allotment option was exercised in full, augmenting its issue of 3.5% exchangeable senior notes to $180 million.

After the close on March 29, the company priced $150 million of the five-year exchangeables cheaper than talk and with an initial conversion premium of 20% and a reoffered price of 99.5.

As already reported, the notes were originally offered at par. They were talked at a coupon of 3% to 3.5% and an initial exchange premium of 20%.

The notes are issued by Strategic Hotel Funding LLC and are exchangeable into common stock of the Strategic Hotels & Resorts.

Deutsche Bank, Citigroup and JP Morgan were the bookrunners of the Rule 144A offering.

The notes are non-callable. There is a contingent exchange trigger at 125% of the exchange price.

The notes have dividend and takeover protection.

The company said that estimated net proceeds amount to $175.9 million.

Strategic Hotels & Resorts, a Chicago-based real estate investment trust that focuses on upscale hotels, will use the proceeds to enter into capped call transactions, to buy back up to $25 million of its common stock, to repay outstanding bank debt and to fund general purposes.

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