Strategic Hotels' preferreds offer set to end Monday, fails target

By Susanna Moon

Chicago, Dec. 19 - Strategic Hotels & Resorts, Inc. said the amount of preferred shares tendered in the offer so far for its three series of preferred stock falls short of the minimum tender condition.

Holders had tendered 2,174,729 preferreds of three preferred series as of 5 p.m. ET on Dec. 16. The offer is set to end at 5 p.m. ET on Dec. 19, and the minimum threshold is 3,237,752 preferreds.

The company will not lower the threshold needed or extend the offer, according to a press release.

As of 5 p.m. ET on Dec. 16, holders had tendered 1,319,798 shares of its 8¼% series C cumulative redeemable preferred stock, 501,576 shares of its 8¼% series B cumulative redeemable preferred stock and 353,355 shares of its 8½% series A cumulative redeemable preferred stock. The series are listed in order of acceptance priority level.

The offer was originally set to expire at 5 p.m. ET on Dec. 12 but was extended the following day after the company failed to meet the minimum tender condition.

At the time, Strategic Hotels also lowered the minimum tender condition to 3,237,752 preferreds from the original threshold of 3,773,585 preferreds.

The revised minimum was equal to the number of preferreds tendered as of the close of business on Dec. 12. That consisted of 1,761,428 series C preferreds, 1,047,435 series B preferreds and 428,889 series A preferreds.

When the offer began on Nov. 7, the company planned to buy up to 4,716,981 shares.

As previously noted, the offers will be terminated and the company's contingent dividend declaration for the preferreds will no longer be valid if the minimum tender condition is not met.

The company is offering to purchase up to 4,716,981 of the 5.75 million outstanding series C preferreds, up to 4.4 million of the 4.6 million outstanding series B preferreds and up to 4,288,750 of the 4,488,750 outstanding series A preferreds.

The purchase price is $26.50 per series C or series B preferred and $26.70 per series A preferred, in each case net to the seller in cash, less any applicable withholding taxes and without accrued dividends.

If the number of preferreds tendered exceeds the total cap or the maximum number of preferreds specified for a particular series of preferreds, the tendered preferreds will be accepted based on their priority levels and may be prorated.

The company has declared accrued dividends through Sept. 30 and dividends for the quarter ending Dec. 31. These dividends will be payable on June 29, 2012 to holders of record as of June 15, 2012. They are contingent on the satisfaction or waiver of all of the conditions of the tender offer and the company's ability to meet on the payment date the requirements of the Maryland General Corporation Law with respect to the payment of dividends. The company expects to be able to meet the requirements of the Maryland General Corporation Law.

Holders whose preferreds are accepted for purchase will not be entitled to receive the unpaid dividends or any other dividends.

The joint lead dealer managers are Deutsche Bank Securities Inc. (855 287-1922 or 212 250-7527) and Bank of America Merrill Lynch (888 292-0070 or 980 683-3215). The information agent is MacKenzie Partners, Inc. (212 929-5500 or 800 322-2885). BNY Shareowner Services is the depositary.

Strategic Hotels & Resorts is a real estate investment trust based in Chicago that owns and manages high-end hotels and resorts.

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