Colony Financial, Inc. (the “Company”) (NYSE: CLNY) today announced the pricing of its public offering of $150,000,000 aggregate principal amount of its 3.875% Convertible Senior Notes due 2021 (the “Notes”) for total gross proceeds of $151,875,000 (excluding accrued interest). The Company has granted to the underwriters a 30-day option to purchase up to an additional $22,500,000 aggregate principal amount of the Notes to cover over-allotments, if any.
The Notes will mature on January 15, 2021. The Notes will bear interest at a rate equal to 3.875% per year, payable semiannually in arrears on January 15 and July 15 of each year, beginning on July 15, 2014. The Notes may be converted into shares of the Company’s common stock at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date, unless the Notes have been previously repurchased or redeemed by the Company. The conversion rate of the Notes will initially equal 40.2941 shares of common stock per $1,000 principal amount of Notes, which is equivalent to a conversion price of approximately $24.82 per share of common stock, representing an approximate 11.5% conversion premium (12.9% effective conversion premium based on the actual re-offer price) based on the closing price of the Company’s common stock of $22.26 per share on June 11, 2014. The conversion rate will be subject to adjustment upon the occurrence of certain events, but will not be adjusted for any accrued and unpaid interest. The offering is expected to close on or about June 17, 2014, subject to customary closing conditions.
The Company intends to use the net proceeds from the offering to repay amounts outstanding under its secured revolving credit facility, and to use any remainder of the net proceeds from this offering to acquire its target assets in a manner consistent with its investment strategies and investment guidelines and for working capital and general corporate purposes.