Oct. 1--Sovran Self Storage plans to raise nearly $100 million by selling additional shares of its stock, becoming the third company based in the Buffalo Niagara region to launch a secondary stock offering in the last two weeks.

Sovran plans to use the money raised by the stock sale to repay some of its $250 million in unsecured debt and to terminate interest rate swaps used to stabilize its borrowing costs.

The Amherst-based real estate investment trust expects the sale of the additional 3.5 million shares to close Monday. Sovran priced the offering Wednesday at $29.75 per share, which will yield the company net proceeds of $98.8 million, after paying for underwriting discounts and commissions, as well as expenses related to the stock sale.

The stock offering, first disclosed late Tuesday, is priced at a 7 percent discount from its Tuesday closing price of $32. The company increased the size of the offering by 500,000 shares Wednesday.

The offering's underwriter, Bank of America Merrill Lynch, also has the option of selling an additional 525,000 new shares of Sovran's stock over the next month if the demand is sufficient. That could increase the proceeds from the offering by more than $15 million, before fees and expenses are deducted.

The stock sale, without the additional shares that could be sold through the overallotment option, would increase the number of Sovran shares outstanding by almost 15 percent. The company, which owns or manages 385 Uncle Bob's self-storage facilities in 24 states, was required to obtain a waiver from its lenders last spring after failing to meet one of the terms of its borrowing agreements pegged to the amount of leverage Sovran was using, relative to its total assets.

That also triggered an upgrade in its credit rating to below investment grade, which resulted in an increase in the interest rate Sovran was paying on its $250 million in term notes, costing the company $3.6 million a year.

The stock sale, coupled with a 30 percent cut in the company's dividend in May, should keep Sovran within its leverage limits and allow it to fully use its line of credit, the company said in a filing with the Securities and Exchange Commission.

Company officials also said they hope the stock sale will lead to an upgrade in its credit rating back to investment grade and reversing the interest rate increase.

First Niagara Financial Group and Moog also have launched secondary offerings within the last two weeks.

drobinson@buffnews.com

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