Sotheby's is offering qualified institutional buyers $150 million of senior unsecured convertible notes due 2013 and $150 million of senior unsecured notes due 2015.
What is the firm going to use the money for? Sotheby's says it expects to use the proceeds from these offerings to finance the reacquisition of its York Avenue headquarters and to redeem its $100 million of existing 6.875% notes due 2009, putting itself in an additional $200 million in debt to do it.
In February 2003, the company sold its 1334 York Avenue property to RFR Holding, LLC and entered into an agreement to lease it back from the buyer for an initial 20-year term, with options to extend the lease for two additional 10-year terms. Later, rumors had the company buying a building nearer its rival Christie's at Rockefeller Center.
Sotheby's said it expects to grant the initial purchasers of the convertible notes an option to purchase up to an additional $22.5 million of convertible notes to cover any overallotments. That's nice of them.