GREENWICH, Conn., Feb. 12, 2013 /PRNewswire/ -- Starwood Property Trust, Inc. (NYSE: STWD) (the "Company") today announced the pricing of an underwritten public offering of $525,000,000 aggregate principal amount of its 4.55% Convertible Senior Notes due 2018 (the "Notes") for total gross proceeds of $525 million. The underwriters have a 30-day option to purchase up to an additional $75,000,000 aggregate principal amount of Notes from the Company to cover over-allotments, if any. Settlement of the offering is subject to customary closing conditions and is expected to occur on February 15, 2013. All of the Notes will be issued under the Company's currently effective shelf registration statement filed with the Securities and Exchange Commission. The Notes will be the Company's senior unsecured obligations and will rank equally with all of its present and future senior unsecured debt and senior to any future subordinated debt.
The Notes will pay interest semiannually at a rate of 4.55% per annum and will mature on March 1, 2018. The Notes will have an initial conversion rate of 35.5391 per $1,000 principal amount of the Notes (equivalent to a conversion price of approximately $28.138 per share of common stock and a conversion premium of approximately 10% based on the closing share price of $25.58 per share of the Company's common stock on February 11, 2013). The initial conversion rate is subject to adjustment upon the occurrence of certain events, but will not be adjusted for any accrued and unpaid interest. Prior to September 1, 2017, the Notes will be convertible only upon certain circumstances and during certain periods, and thereafter will be convertible at any time prior to the close of business on the second scheduled trading day prior to maturity. Upon conversion, holders will receive cash, shares of the Company's common stock or a combination thereof at the Company's election.
The Company intends to use the net proceeds received from the offering to originate and to purchase additional commercial mortgage loans and other target assets and investments. Depending upon the timing of the closing of those transactions, the closing of the Company's acquisition of LNR Property LLC ("LNR"), and the Company's receipt of funds from asset repayments, sales of assets or other financings, the Company may utilize a portion of the proceeds to fund a portion of the purchase price of LNR. The Company may also use a portion of the net proceeds for other general corporate purposes, including, but not limited to, the payment of liabilities and other working capital needs.
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