China Lodging plans $425 million five-year convertibles

By Rebecca Melvin

New York, Oct. 26 – China Lodging Group Ltd. plans to price $425 million of five-year convertible senior notes under Rule 144A and Regulation S, according to a news release.

The deal is being made concurrently with an offering of American Depositary Shares.

There is also a $50 million greenshoe of notes.

Deutsche Bank is a bookrunner for the deal.

In connection with the notes offering, the company plans to enter into an ADS lending agreement with an ADS borrower under which the company will lend a certain number of shares to the borrower, and the borrower will sell some of the shares to investors hedging the notes. Share sales are estimated to be between $40 million and $70 million.

Proceeds from the notes will be used to pay the cost of the capped call transactions, to repay all or part of a $250 million revolving credit facility, to make investments in minority equity interests in businesses, and for other general corporate purposes.

Shanghai-based China Lodging is a multi-brand hotel group in China.

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