Pebblebrook refinances with US$350m 5-year CB
Pebblebrook Hotel Trust raised US$350m from a convertible bond offering as it refinanced an existing issue out of necessity.
Raymond James was sole bookrunner on the pricing of the new five-year CBs at a 1.625% coupon and 37.5% conversion premium after marketing them overnight on Tuesday at 1.5%–2% and 35%–40%.
The hotel REIT bought back roughly US$400m principal of a 1.75% CB issue that matures at the end of 2026. Those securities are convertible at US$25.47 and trade at about 96 cents on the dollar.
Pebblebrook’s shares closed Wednesday's session at US$11.80, up 2.1%.
Rather than issue stock on that bond repurchase, Pebblebrook bought back 4.3m shares from the 2026 holders.
Pebblebrook has smoothed its CB maturities across US$350m of the remaining 2026 paper and US$350m of the new CBs maturing in 2030.
The REIT cushioned the blow for shareholders by purchasing a capped call to offset dilution from the new CBs up to a price of US$20.23, a 75% premium to the US$11.56 reference price.
Pebblebrook finished Q2 with US$267.1m of cash.