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Pier 1 Offers $150 Million In Convertible Notes

By Home Furnishings Business in on February 2006 Pier 1 has commenced an offering of $150 million of convertible senior notes due 2036 in a private offering.

In addition, the Fort Worth, Texas-based retailer said it expects to grant the initial purchaser the option to purchase an additional $15 million of notes. The notes pay interest semi-annually and will be convertible upon the occurrence of specified events into a combination of cash and the company's common stock at a conversion rate to be determined.

Pier 1 plans to use a portion of the proceeds from the offering to pay the cost of the convertible note hedge transaction, as well as to use the remainder to pay the expenses of the offering and for general corporate purposes.

The notes are guaranteed by certain of Pier 1's subsidiaries, and the retailer will pay cash equal to or less than the principal amount, shares of its common stock with a value equal to such excess.

In connection with the offering, Pier 1 expects to enter into a convertible note hedge transaction with an affiliate of the initial purchaser of the notes to increase the effective conversion premium.


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