M&A

2 November, 2009

UPDATE 2-Vornado offers to buy back $2.01 bln of bonds

* Offers to buy back $2.01 bln in convertible debt

* Shares pare loss (Adds share movement, analyst rating, byline)

By Ilaina Jonas

NEW YORK, Nov 2 (Reuters) - Vornado Realty Trust (VNO.N), owner and developer of U.S. office and retail properties, said on Monday it is offering to buy back up to $2.01 billion of its convertible bonds at par.

Vornado, which is set to report its third-quarter results on Tuesday, said it is offering to buy any or all of the $886.97 million principal amount of outstanding 3.625 percent convertible senior debentures due 2026 and $1.13 billion of its outstanding 2.85 percent convertible senior debentures due 2027.

Vornado said it would pay $1,000 per $1,000 in principal the securities hold, plus accrued and unpaid interest.

The New Jersey-based real estate investment trust said it intends to pay for the securities using available cash.

Last month, Sandler O'Neill analyst Alexander Goldfarb, initiated coverage on Vornado and said the company would likely use its "war chest" of cash to buy back its bonds instead of using it for opportunistic investments.

Goldfarb initiated coverage with a "sell" rating on the shares.

After the announcement, Vornado shares, which had been down 1.9 percent, pared the loss and were off 59 cents or less than 1 percent, at $58.97. The benchmark MSCI U.S. REIT Index .RMZ was off 1.3 percent. (Reporting by Ilaina Jonas, editing by Leslie Gevirtz, editing by Gerald E. McCormick)

Source: http://www.reuters.com