By Abigail W. Adams
Portland, Me., Dec. 4 – Melcor Real Estate Investment Trust priced C$20 million in five-year convertible unsecured subordinated debentures to yield 5.25% with an initial conversion premium of 30%.
Concurrently Melcor REIT priced C$15 million of subscription receipts at C$8.50 per subscription receipt. Melcor Developments Ltd. will subscribe for $2.5 million of class B LP units at C$8.82 per unit.
Proceeds will be used as part of the financing package for Melcor REIT’s C$80.875 million acquisition of five commercial properties from Melcor Developments Ltd.
CIBC Capital Markets and RBC Capital Markets are lead underwriters for the convertible debentures and the subscription receipts.
The convertible debentures carry a greenshoe of C$3 million.
“This acquisition again demonstrates the advantage of our exclusive Melcor property pipeline to execute on our growth strategy,” said Andy Melton, chief executive officer of Melcor REIT, in a press release.
The initial conversion rate of the 5.25% convertible debentures due 2022 is 86.95965 and the conversion price C$11.50. If the acquisition does not occur, the notes will be terminated, according to a company release.
Upon completion of the acquisition, Melcor Developments Ltd. will own a 53.6% interest in the REIT through ownership of 14,899,325 class B LP units, according to the release.
Melcor REIT is an Alberta, Canada-based retail, office, and industrial real estate investment trust.
| Issuer: | Melcor Real Estate Investment Trust
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| Securities: | Convertible unsecured subordinated debenture
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| Amount: | C$20 million
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| Greenshoe: | C$3 million
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| Maturity: | Dec. 31, 2022
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| Bookrunners: | CIBC Capital Markets and RBC Capital Markets
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| Coupon: | 5.25%
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| Par: | 100
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| Conversion premium: | 30%
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| Conversion price: | C$11.50
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| Conversion rate: | 86.9565 Units
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| Pricing date: | Dec. 4
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| Settlement date: | Dec. 21
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| Stock symbol: | TSE: MR.UN
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| Stock price: | C$8.82 as of Dec. 4 close
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| Market capitalization: | C$98.35 million
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