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Sun Develops New Debt Plan

SOUTHFIELD, MI-Sun Communities Inc. says it is working on a plan to change its debt structuring, calling the action its most significant transaction since going public in 1993.

By Dan Heaton | Updated on April 11, 2004

SOUTHFIELD, MI-In what its chairman calls its most significant capital events since its 1993 IPO, Sun Communities plans to replace all of its existing unsecured debt with longer term debt secured by the company’s housing communities. Standard & Poor’s Ratings Services placed its ‘BBB’ ratings on Sun Communities Inc. and its subsidiary, Sun Communities Operating L.P., on CreditWatch. The CreditWatch placements affect $350 million of senior notes.

Moody’s Investors Service also took action based on Sun’s plan, lowering the ratings of Sun’s senior unsecured debt to Baa3 from Baa2. Moody’s also said the ratings remain under review for possible downgrade.

The CreditWatch placements followed Sun’s announcement of a tender offer to purchase all outstanding senior unsecured notes at par value plus a specified spread over the yield to maturity. Sun is also soliciting note holders’ consent to eliminate the restrictive covenants under the debt. Sun will pay $30 per $1,000 of principal amount of the tendered notes to holders who properly tender their notes and consent by April 19.

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