Prologis offers to buy back $500m in loan notes

Prologis, the New York-listed global developer of distribution facilities, has launched a tender offer to buy back up to $500 mln (EUR 366 mln) worth of loan notes due for repayment on 15 November 2010. The notes carry an interest of 5.25% and Prologis is offering to buy them back for 70% of the face value plus accrued and unpaid interest to date.

The tender offer is managed by JP Morgan Securities and expires at 11:59 pm., New York City time, on Wednesday, 17 December 2008. Prologis reserves the right to terminate the offer earlier or to extend the deadline.

Prologis has said it expects to use available cash and borrowings under its $4.3 bn lines of credit to fund its purchase of the loan notes. The notes purchased under the tender offer are expected to be cancelled.

Like most other listed real estate companies, Prologis has experienced a sharp drop in its share price this year. Jeffrey Schwartz resigned as CEO in mid-November and was replaced by Walter Rakowich, a former president and chief operating officer of Prologis.

Last month the company outlined an action plan for investors including re-financing and renegotiating debt maturities on Prologis' balance sheet and in its property funds, halting new development starts, shrinking the development pipeline, de-levering the balance sheet, and retaining capital through G&A cuts and a reduction of the dividend. 'We will continue to report our progress as we execute on our plan,' said Bill Sullivan, chief financial officer.

Prologis' share price dropped to a low of $5.65 last Thursday before news of the tender offer pushed the shares up to $7.82 in early trading on Friday. The company share has fallen by 88% in the last year.