CapitalSource Inc., in Chevy Chase, Md., is moving forward with plans to sell $71.8 million of common stock and $300 million of senior secured notes.
The commercial lending company, which owns the $11.4 billion-asset CapitalSource Bank in Pasadena, Calif., said after the market closed Tuesday that it would sell 17.5 million shares at $4.10 each.
That is a 5% discount from Tuesday's closing price. By midday Wednesday, CapitalSource's stock was up 5%, to $4.52.
The proceeds could swell to $82.5 million should the underwriters purchase additional shares to cover overallotments.
The senior secured notes would be due in 2014, and the proceeds would be used to make a payment on a senior secured credit facility. The lenders agreed to extend the maturity date on the $900 million facility to March 2012, if CapitalSource, which owes $778 million, makes a $300 million payment.
The company had announced its plans for the equity and debt sales on Friday.
In a research note Monday, Sameer Gokhale, an analyst with KBW Inc.'s Keefe, Bruyette & Woods, called the stock offering "disappointing" because of the dilution. However, he wrote, "To the extent that it helps further increase liquidity...the trade-off may be justified."
