ProLogis Announces Tender Offer for Any and All of Its 5.25 Percent Notes Due November 15, 2010
DENVER, Dec 11, 2008 /PRNewswire-FirstCall via COMTEX/ -- ProLogis (PLD:prologis sh ben int
News, chart, profile, more
Delayed quote dataAdd to portfolio
PLD 5.60, +5.60, 0.0%) , a leading global provider of distribution facilities, today announced that it has commenced a cash tender offer (the "Tender Offer") for any and all of the $500 million principal amount of its 5.25 percent Notes due November 15, 2010 (the "Notes"). The consideration payable for the Notes is $700 per $1,000 principal amount of Notes, plus accrued and unpaid interest to, but not including, the payment date for the Notes purchased in the Tender Offer, which is expected to be the first business day following the Expiration Time (as defined below). Additional terms and conditions of the Tender Offer are set forth in the Offer to Purchase dated December 11, 2008 (the "Offer to Purchase"), and the related Letter of Transmittal (the "Letter of Transmittal").
Good question, sorce7er, I was wondering the same thing myself. Maybe they have a dual purpose: buying back distressed debt for a risk-free profit and making it a public tender in order to reassure the market and help their stock price. I think the debt buy-back, particularly this 2-year debt that was trading at such a severe discount, is a great, long-overdue idea.
interesting numbers.... paying 70 cents on the dollar for the 5.25% notes implies an effective interest rate of 7.5%... so a note holder gets immediate cash out and PLD reduces their balance sheet by $1000 for each note tendered... and these notes are due in Nov 2009... question is how may will tender ???
have to give PLD credit for efforts to reduce outstanding debt... hope they don't need any cash in the next two years...
This is bad. .70 to dollar, who wants that? Maybe when finished they are offering 75cents to the dollar. Not good they are saying take it now while you can or else you might not get to 2010. They must see business down turning even more in the near future.
My understanding is that this debt was trading at significantly less than $0.70 on the open market (haven't been able to see a price on it), so for many who bought the debt over the past several months, a $0.70 price could be a great profit for them and will take out the risk of default.
At the same time, PLD trades $1 of debt due in late 2010 for $0.70 of debt due in late 2010. If they buy 100% of this debt, it would add ~$0.50 in equity for the common.
Win/win. They are making some very smart moves to de-lever their balance sheet. Feels good to be long...today.
What are you talking about? The market perception on PLD is bad, so the debt is trading distressed. But now the co said: look, I have cash and I can pay early. That'll instill confidence to the players so they are not scared.
This is a great PR by the co.
I would rate it as neutral because: you don't have to tender the bonds, and it shows they have the money.
I would like too know what the bonds are trading at and compare them to the offer.
Okay, I realize I'm an idiot on these things, but why is this good news? I thought that in these times, cash would be king, yet they are basically paying off thier debt with more debt? I want PLD to go up bad, I took a bath today and I'm scared to death of the open.
I just want to understand? HELP