UBS plans autocallable optimization securities linked to coal stock basket

By Jennifer Chiou

New York, July 9 - UBS AG plans to price 0% autocallable optimization securities with contingent protection due Jan. 29, 2010 linked to a coal stock basket, according to an FWP filing with the Securities and Exchange Commission.

The basket includes equal weights of Peabody Energy Corp., Consol Energy, International Coal Group Inc. and James River Coal Co.

The notes will be automatically called if any of the basket stocks closes at or above its initial level on any of six quarterly observation dates. If the notes are called, the redemption amount will be par of $10 plus an annualized call return of 24% to 27%. The exact return will be set at pricing.

If the notes are not called, the payout at maturity will be par unless any basket stock closes below the trigger level - 60% of the initial level - during the life of the notes and finishes below the initial level, in which case investors will be fully exposed to the basket decline.

The notes are expected to price on July 28 and settle on July 31.

UBS Financial Services Inc. and UBS Investment Bank will be the underwriters.

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