LodgeNet Interactive raises $57.5 million through private placement of convertible preferred stock

LodgeNet Interactive Corporation (formerly LodgeNet Entertainment Corporation) has raised $57.5 million through a private placement of convertible preferred stock.

LodgeNet is a US-based provider of interactive television and broadband solutions to hotels, resorts, and casinos.

Under the placement, LodgeNet issued 0.05 million shares of 10% Series B cumulative perpetual convertible preferred stock, $0.01 par value, with a liquidation preference of $1,000 per share. In addition, the initial purchaser exercised the option to purchase an additional 7,500 shares of preferred stock to cover over-allotments in full, bringing the total amount of the preferred stock sold to 57,500 shares.

Update on June 24, 2009:

LodgeNet has priced its private offering of preferred stock. LodgeNet will issue 0.05 million shares of 10% Series B cumulative perpetual convertible preferred stock, $0.01 par value, with a liquidation preference of $1,000 per share.

The company also granted the initial purchasers a 30-day option to purchase up to an additional 7,500 shares of preferred stock to cover overallotments. The offering is expected to close on June 29, 2009.

The preferred stock will be convertible, at the holder's option into common stock of LodgeNet at an initial conversion rate of 264.5503 shares of LodgeNet's common stock per share of preferred stock, which is equivalent to an initial conversion price of $3.78 per share, or a conversion premium of approximately 10% based on the consolidated closing bid price of $3.43 per share of LodgeNet's common stock on June 23, 2009.

Announcement (June 22, 2009):

LodgeNet is planning to raise $50 million through the issuance of shares of its Series B cumulative perpetual convertible preferred stock, with a liquidation preference of $1,000 per share in a private offering to qualified institutional buyers.

LodgeNet expects to grant the initial purchaser of the preferred stock a 30-day option to purchase up to an additional $7.5 million of the preferred stock to cover over-allotments.

Merrill Lynch, Pierce, Fenner & Smith Incorporated is acting as placement agent for the offering.

Deal Value (US$ Million) 57.5
Deal Type                Private Placement
Sub-Category             None
Deal Status              Completed: 2009-06-29

Deal Participants

Target (Company)   LodgeNet Interactive Corporation
Acquirer (Company) Undisclosed Investors

Deal Rationale

LodgeNet expects to use half of the net proceeds of the offering to reduce the outstanding balance on the term loan under its credit facility and use the balance of the proceeds for general working capital purposes, including further voluntary reductions of the term loan. The proceeds from the offering would improve LodgeNet Interactive's consolidated leverage and interest coverage ratios.

Related terms: bandwidth, Private Placement, television