Lanesborough REIT seeks approval to extend, amend 7.5% convertibles

By Angela McDaniels

Tacoma, Wash., Sept. 22 - Lanesborough Real Estate Investment Trust wants to extend and amend its C$25 million of outstanding 7.5% convertible redeemable subordinated debentures because it does not have the cash resources to repay the convertibles when they mature on Dec. 31, 2011, according to a company news release.

Holders will vote on whether to accept the amendments at a meeting on Oct. 27.

Lanesborough said its operations have seen recent improvement, but all available cash resources have been used to fund capital expenditures on its property portfolio and to service current debt.

According to the company, its ability to realize its business strategy and to establish adequate working capital is contingent on, among other things, a successful resolution of the convertibles.

At the meeting, holders will be asked to approve the following amendments:

• Extend the maturity date to Feb. 28, 2015;

• Increase the interest rate to 9.5%;

• Eliminate the ability of the holders to convert the debentures into trust units;

• Amend the redemption features;

• Eliminate the ability of Lanesborough to repay the principal amount with units;

• Eliminate the ability of Lanesborough to pay interest with freely tradable units; and

• Improve the security on the convertibles so that they are secured by a charge to and in favor of the indenture trustee on all of Lanesborough's property and assets, subject to senior debt and permitted encumbrances.

In order to effect the amendments, Lanesborough will have to enter into a supplemental trust indenture with the trustee for the debentures, CIBC Mellon Trust Co.

National Bank Financial Inc. is solicitation agent.

Lanesborough is a REIT based in Winnipeg, Man.

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