Associated Estates Realty Corp. (AEC) announced that it has priced a public offering of 6.50 million of its common shares at a price of $17.25 per share, all of which are being offered in connection with the forward sale agreements.
Associated Estates also granted the underwriters a 30-day option to purchase up to an additional 975,000 of its common shares. The offering is expected to close on or about June 3, 2013, subject to customary closing conditions.
Associated Estates expects to use the net proceeds received from the forward equity sale to repay debt that is scheduled to mature on October 1, 2013 and for general corporate purposes.
Citigroup, BofA Merrill Lynch and Wells Fargo Securities served as joint book-running managers for the offering. Jefferies and Raymond James served as co-lead managers for the offering. Barclays, Cantor Fitzgerald & Co., Sandler O'Neill + Partners, L.P., Compass Point Research & Trading, LLC and RBS Securities Inc. served as co-managers for the offering.
In connection with the offering of its common shares, Associated Estates has entered into forward sale agreements with Citigroup Global Markets Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Wells Fargo Securities, LLC, or their respective affiliates (which are referred to as the forward purchasers) with respect to 6.50 million of its common shares.
The forward purchasers are expected to borrow and sell 6.50 million common shares of Associated Estates in aggregate. Pursuant to the terms of the forward sale agreements, and subject to its right to elect cash or net share settlement, Associated Estates intends to sell, upon physical settlement of such forward sale agreements, an aggregate of 6.50 million of its common shares to the forward purchasers. If the option is exercised, the number of common shares underlying the forward sale agreements is expected to be increased in respect of the number of common shares that are subject to the exercise of the option.
Settlement of the forward sale agreements will occur no later than October 1, 2013.
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