Melcor greenshoe lifts 5.5% extendible convertibles to C$34.5 million

By Susanna Moon

Chicago, Dec. 3 – Melcor Real Estate Investment Trust said underwriters fully exercised the C$4.5 million over-allotment option on its 5.5% extendible convertible debentures, bringing the total deal size to C$34.5 million.

As previously announced, Melcor Real Estate Investment Trust priced C$30 million of the convertibles on a bought deal basis on Nov. 12 to yield 5.5% with an initial conversion premium of 25% over the closing unit price.

Melcor previously said it also was pricing about C$45 million of class B LP units at an issue price of C$10.25 per unit.

Proceeds of the debentures and the units are earmarked to finance a portion of the cash component of the purchase price of a C$138.25 million acquisition of commercial properties from Melcor Developments Ltd., the REIT’s external asset manager and property manager.

Proceeds of the debentures are also earmarked to repay other debt, to finance future acquisitions and for general trust purposes.

The syndicate of underwriters was co-led by RBC Capital Markets and CIBC.

The maturity date is initially Jan. 15, 2015. Upon closing of the acquisition, the maturity date will automatically be extended to Dec. 31, 2019.

In the event that the Melcor acquisition does not close, the convertible will mature on the initial maturity date.

The deal was offered in Canada under a short form prospectus and was eligible for sale in the United States under Rule 144A.

Edmonton, Alta.-based Melcor develops and manages mixed-use residential communities, business and industrial parks, office space, retail centers and golf courses.

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