iStar begins exchange offers for 16 notes series, tender offer for floaters

By Angela McDaniels

Tacoma, Wash., - iStar Financial Inc. has begun private offers to issue up to $1 billion principal amount of new second-lien senior secured notes in exchange for a portion of its existing senior unsecured notes, according to a company news release.

Notes eligible for exchange, their acceptance priority level and the principal amount of new notes to be received for each note exchanged are indicated in the table below.

Tendered notes will be accepted in order of priority acceptance level and may be subject to proration, and no more than $450 million principal amount of priority 1 notes will be accepted.

The exchange amounts include $30 principal of new notes that will only be paid for every $1,000 principal amount of notes tendered by the early delivery time.

Holders will also receive accrued interest up to but excluding the settlement date.

The company is offering 8% second-priority senior secured guaranteed notes due March 2011 in exchange for notes tendered with an acceptance priority of 1 and 10% second-priority senior secured guaranteed notes due June 2014 in exchange for the remaining notes.

The new notes will be senior obligations of the company and will be guaranteed by all of its subsidiaries that are guarantors of its new first-lien credit facility and second-lien credit facilities.

The new notes will share ratably with the lenders under the second-lien credit facilities in a second-priority lien on the collateral securing the first- and second-lien credit facilities.

A covenant in the credit facilities prohibits iStar from issuing more than $1 billion of new notes, the release stated.

Tender offer

The company said it is also making a cash tender offer for up to $265 million principal amount of its outstanding series B senior floating-rate notes due September 2009.

The amount on offer is $900 per note, which includes a $30 premium for every $1,000 principal amount of notes tendered by the early delivery time.

Holders will also receive accrued interest up to but excluding the settlement date.

If the offer is oversubscribed, each participating holder will have their notes accepted on a pro rata basis.

The exchange offers and tender offer expire at midnight ET on May 6, and the early delivery time for each offer is 5 p.m. ET on April 22.

Global Bondholder Services Corp. (866 794-2200 or 212 925-1630) is the information agent.

iStar is a New York-based finance company focused on the commercial real estate industry.

iStar exchange offer

Notes Exchange amount Priority level

$473 million senior floating-rate notes due March 2010 $850 1

$235 million 5 3/8% senior notes due Aril 2010 $850 1

$680.66 million 8 5/8% senior notes due June 2013 $600 2

$780.43 million 5.95% series B senior notes due October 2013 $550 2

$123.49 million 6½% senior notes due December 2013 $550 2

$290.01 million 5.7% series B senior notes due March 2014 $550 2

$1.84 million 5.7% series A senior notes due March 2014 $550 2

$179.19 million 6.05% senior notes due April 2015 $550 2

$370.49 million 5 7/8% senior notes due March 2016 $500 2

$154.51 million 5.85% senior notes due March 2017 $500 2

$325.40 million 6% senior notes due December 2010 $700 3

$224.50 million 5.8% senior notes due March 2011 $650 3

$234.15 million 5 1/8% series B senior notes due April 2011 $650 3

$416.02 million 5.65% senior notes due September 2011 $650 3

$587.77 million 5.15% senior notes due March 2012 $600 3

$230.70 million 5½% senior notes due June 2012 $600 3

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