UPDATE 2-PEPR to raise 61 mln euros with preference issue

* Convertible preference issue fully underwritten

* Priced at 5.93 euros/unit

* 2010 debt reduced to 634 mln euros

* Shares almost flat

(Adds details on debt reductions, bank covenants)

By Aaron Gray-Block

AMSTERDAM, Nov 16 (Reuters) - Debt-laden ProLogis European Properties (PEPR.AS) said on Monday it would launch a fully underwritten 61 million-euro convertible preference share issue and that it might make a further issue later.

PEPR, which is cutting debt and selling assets and manages 3 billion euros worth of European distribution facilities, had said last month it might make such an issue before the end of the year.

PEPR shares were up 0.04 percent at 4.451 euros, underperforming a 2.5 percent rise in the Amsterdam midcap index .AMX.

The company, which has been hit by falling property prices, said on Monday it would offer the perpetual convertible preferred shares at 5.93 euros per unit, equal to the revised net asset value per ordinary unit as at the end of September.

PEPR intends to use the net proceeds from the offering to reduce outstanding debt and for general corporate purposes.

To cope with the credit crisis, the company said its primary objective had been to address 1.3 billion euros in debt maturities in 2009 and 2010, to reduce balance sheet risk and increase its financial flexibility.

"We are confident that we have placed the business on a more secure footing for the future," Chief Executive Peter Cassells said in a statement.

PEPR added it had gained majority approval last week from its banking group to amend covenants within its 900 million euros senior unsecured credit facility.

Besides the 61 million euro issue, PEPR said a second offer of at least 60 million euros was also an option.