ProLogis holders deliver needed consents for $2.96 billion of notes

By Susanna Moon

Chicago, Oct. 1 - ProLogis said it obtained the required consents in its solicitation to amend the indenture governing $2,963,132,000 outstanding principal amount of its debt securities.

The consent solicitation ended at 5 p.m. ET on Oct. 1. It began on Sept. 21.

As a result, ProLogis entered into a ninth supplemental indenture.

The company sought to amend the debt incurrence covenants, related defined terms and the thresholds for some events of default to match the terms of the Aug. 14, 2009 eighth supplemental indenture governing its $350 million principal amount of 7.625% notes due 2014.

"By making the covenants consistent, it simplifies compliance and makes the terms of the covenants more transparent to investors," Bill Sullivan, ProLogis' chief financial officer, said in a press release. "One of our stated objectives has been to improve our financial flexibility and transparency, and this consent is a further step in that direction."

According to a bondholder presentation posted on the company's web site, the amendments would require ProLogis to maintain leverage of 60% or less, a fixed charge coverage ratio of 1.5 times or more, an unencumbered assets-to-unsecured debt ratio of 1.5 times or more and secured debt leverage of 40% or less. They would also set the cross-default threshold at $50 million and change the asset definition to use undepreciated book rather than market asset value.

As previously noted, holders will receive $2.50 in cash for each $1,000 principal amount of notes for which a consent has been granted.

The debt securities covered by the offer are ProLogis':

• $190,278,000 of 5.25% senior notes due 2010;

• $280,788,000 of 5.5% senior notes due 2012;

• $262,066,000 of 5.5% senior notes due 2013;

• $100 million of 7.81% senior notes due 2015;

• $30 million of 9.34% senior notes due 2015;

• $400 million of 5.625% senior notes due 2015;

• $400 million of 5.75% senior notes due 2016;

• $50 million of 8.65% senior notes due 2016;

• $550 million of 5.625% senior notes due 2016;

• $100 million of 7.625% senior notes due 2017; and

• $600 million of 6.625% senior notes due 2018.

The proposed amendments required the consent of at least a majority in principal amount of the outstanding debt securities, the debt securities subject to the Nov. 2, 2005 second supplemental indenture and the debt securities subject to the May 7, 2008 seventh supplemental indenture, in each case voting as a single class.

The 5.25% notes due 2010, 5.625% notes due 2015, 5.5% notes due 2012, 5.75% notes due 2016 and 5.625% notes due 2016 were issued under the second supplemental indenture, and the 6.625% notes due 2018 were issued under the seventh supplemental indenture. The remainder of the notes was issued under the original indenture.

J.P. Morgan Securities Inc. (866 834-4666 or 212 834-3424), RBS Securities Inc. and Wells Fargo Securities, LLC are the solicitation agents, and Global Bondholder Services Corp. (866 612-1500 or 212 430-3774) is the information and tabulation agent.

ProLogis is a Denver-based provider of distribution facilities.

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