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Pebblebrook Hotel Trust (NYSE:PEB) (the "Company") today announced that it has launched a private placement, subject to market conditions and other factors, of $350,000,000 aggregate principal amount of Convertible Senior Notes due 2030 (the "Notes"). The Company expects to grant to the initial purchasers of the Notes an option to purchase up to an additional $50,000,000 aggregate principal amount of the Notes solely to cover over-allotments, if any, for settlement within a 13-day period beginning on, and including, the first date on which the Notes are issued.
The Company intends to use the net proceeds from the offering (and, if the initial purchasers of the Notes exercise their option to purchase additional Notes, the net proceeds from the sale of the additional Notes) to repurchase, in privately negotiated transactions, certain of its 1.75% Convertible Senior Notes due 2026 ("2026 Notes").
In connection with such repurchases, the Company expects that holders of the 2026 Notes that sell their 2026 Notes to the Company may enter into or unwind various derivatives with respect to the Company's common shares of beneficial interest, $0.01 par value per share (the "Common Shares"), and/or purchase or sell Common Shares in the market to hedge their exposure in connection with these transactions. The Company understands that many holders of the 2026 Notes employ a convertible arbitrage strategy with respect to the 2026 Notes and have a short position with respect to the Common Shares that they may close, through purchases of Common Shares and/or by entry into or unwinding of economically equivalent derivatives transactions with respect to the Common Shares, in connection with the Company's repurchase of their 2026 Notes for cash. This activity could increase (or reduce the size of any decrease in) the market price of the Common Shares and/or increase the effective conversion price for the Notes at that time.
Posted In: PEB
