Sotheby’s to Purchase NYC Headquarters

Sotheby’s said Monday that it plans to offer $300 million worth of bonds in order to finance the acquisition of its New York headquarters.

The custion said said it expects to use the proceeds from these offerings to finance the acquisition of its property on 1334 York Avenue, on the upper east side of Manhattan, and to redeem its $100 million of existing 6.875 percent notes due 2009.

Sotheby’s said it plans to offer $150 million of senior unsecured convertible notes due 2013 and $150 million of senior unsecured notes due 2015 through offerings to qualified institutional buyers. 

The interest rates, conversion rate of the convertible notes, offering prices, and other terms are to be determined by negotiations between Sotheby’s and the initial purchasers of the notes, the suction house said Monday.

On Thursday, Sotheby’s provided an update of its offering, saying it expects to close on the offering of $175 million of senior unsecured convertible notes due 2013 on or about June 17. It said it granted the initial purchasers an option to buy up to an additional $25 million of convertible notes to cover over-allotments, if any.

The senior unsecured convertible notes will pay interest semiannually at a rate of 3.125 percent per year. The company added that in certain circumstances, the notes will be convertible into cash, common shares or a combination thereof, based on an initial conversion rate of 29.4122 shares of common stock per $1,000 principal amount of the notes, representing an initial conversion price of about $34 per share.