The Bermuda Financial Centre Ltd. is planning a rights offering to raise $28 million for the further development of its project at the site of the Bermudiana Hotel.

The offering, which must be approved by shareholders at a general meeting next month, is conditional on the firm securing an underwriting for the deal. The shareholders must also approve a proposed conversion of preferred shares to convertible shares.

The news was revealed in a letter to shareholders from BFCL president the Hon.

Michael Winfield, who also reported that a market study and land valuation report from Coopers & Lybrand (Bahrain) confirmed that the company's purchase of the Bermudiana Hotel property for $14.35 million was a deal, when compared to the $25.7 million value.

Mr. Winfield said in the newsletter: "The Rights Offering is conditional on the company and its financial advisor securing equity underwriting commitments for the underwriting syndicate which, in turn, will be subject to securing the necessary debt financing.

"Under the proposed Rights Offering, the company would offer a total of 5,711,796 additional shares at $5.00 per share to what has already been issued. This would raise gross proceeds of $28,558,980.

"Bermuda International Securities Ltd., a wholly owned subsidiary of the Bank of Bermuda has agreed, subject to the company securing the necessary debt financing, to underwrite a minimum syndicate percentage of approximately 26.26 percent of the necessary equity, which equates to a minimum underwriting exposure of 1,500,000 common shares for a total of $7,500,000.'' The company's financial advisors will spend the next ten days trying to get additional underwriting commitments for the remaining amount. Mr. Winfield said that if shareholders do not take up the rights/shares available to them in the rights offering, the outstanding amount would be taken up by the underwriting syndicate.

The company is intending to have this matter resolved by January 3, when two Special General Meetings are being called for the shareholders of both types of stock to vote.

The letter said that the decision is fundamental to the success of the project.

Shareholders are being asked to "agree to an amendment to the conversion right attached to the Convertible Preferred Shares as specified in the resolution passed at a meeting of the shareholders of the company on the 8th September, 1993''.

Once approval is given, shareholders will have an immediate right to purchase additional shares on what could be a six for one basis.

The letter states: "The price per share is likely to be $5.00. We cannot be more definite, at this time, because market conditions will determine the interest the company pays for the debt financing. And because both the debt/equity ratio and debt coverage ratio are important elements of the new structure this, in turn, will determine the total equity required.'' Financial advisors will be trying over the next two weeks to establish an interest rate with lenders and at that time the Rights offering will become more specific.

Mr. Winfield pointed out that contrary to the last newsletter, the Rights Offering will carry the right of transfer.

He warns that the offer will result in a substantial dilution for shareholders who do not exercise their rights.

BFCL had earlier stated that Centre Reinsurance Holdings Ltd. had agreed to lease a huge chunk of the office space that will be made available at the Financial Centre.

Centre Re is expected to lease 71,000 square feet, or 28.4 percent of the available space for five years, with two renewable options, starting April 1, 1997 or completion of the northwest and centre buildings.

BFCL has held lease discussions with 68 companies, with 21 expressing potential interest that would exceed the approximately 180,000 square feet of remaining space.

Negotiations are underway to secure formal letters of intent.

The newsletter also addressed the Bermuda Stock Exchange's decision to turn down the company's request for a longer suspension of convertible preferred share trading, than the week that was allowed.

"While we still believe our request was the correct course of action, it was decided to abide by the Stock Exchange's decision and not take any further steps to prevent the trading of the shares,'' Mr. Winfield said.

"A copy of this newsletter will be sent to the Bermuda Stock Exchange. I can only add that I would strongly urge you to read the information contained in this newsletter carefully and not to take any precipitous action regarding the trading of shares. There is still much to be accomplished and we need to get all the necessary ingredients together.''