E*TRADE (ETFC) Reports on Progress of Debt Exchange Offer
E*TRADE FINANCIAL Corporation (NASDAQ: ETFC) announced today the progress of its previously announced debt exchange offer to exchange more than $1 billion of newly-issued zero coupon Convertible Debentures due 2019 for all of its 8% Senior Notes due 2011 and a portion of its 12.5% Springing Lien Notes due 2017. Assuming the Exchange Offer is completed, the Debentures issued in exchange for any Notes tendered during the period ending at midnight, New York City time, on July 1, 2009, will be Class A Debentures and have a conversion price of $1.0340 per share. In connection with the Exchange Offer, the Company is also soliciting consents to amendments and waivers of certain provisions of the indentures governing the Notes during the Early Tender Period, unless extended.
As of 5:00 p.m., New York City time, July 1, 2009, approximately $428,206,000 of 2011 Notes and approximately $1,102,779,248 of 2017 Notes had been validly tendered, including $230,245,000 of 2011 Notes and $700,000,000 of 2017 Notes tendered by affiliates of Citadel Investment Group L.L.C. Because the aggregate principal amount of 2017 Notes tendered by holders other than Citadel exceeds $310,000,000, acceptance of the 2017 Notes tendered by such holders for exchange will be pro-rated as described in the Offering Memorandum related to the Exchange Offer dated June 22, 2009.
Approval of the amendments and waivers to the indentures governing the 2011 Notes and the 2017 Notes requires, with respect to each series, Consents from holders of an absolute majority of the outstanding Notes, as well as Consents from holders of a majority of the Notes not held by Citadel. Pursuant to the terms of the Exchange Offer, holders tendering Notes for exchange are deemed to have delivered Consents with respect to such Notes and holders other than Citadel can deliver a Consent without tendering the related Notes in exchange for a consent fee of $5.00 per every $1,000 principal amount of Notes to which such Consent relates. Citadel has agreed to deliver sufficient Consents, prior to midnight, New York City time, on July 1, 2009, such that Consents with respect to an absolute majority of each series of Notes will be obtained and has waived the Consent Fee with respect to such Notes. In addition, based on the results disclosed above, the Majority of the Minority Consent has been obtained with respect to both the 2011 Notes and the 2017 Notes.
The foregoing results represent the Company's preliminary calculations of Notes tendered and Consents delivered, and are subject to change.
The Early Tender Period remains open until midnight, New York City time, on July 1, 2009, for additional tenders of Notes for exchange and deemed consent. The deadline for delivering Consents without tendering the related Notes to receive the Consent Fee and for withdrawing Notes and Consents previously tendered expired at 5:00 p.m., New York City time, on July 1, 2009.
The complete terms and conditions of the Exchange Offer are set forth in the Offering Memorandum, and the related letter of transmittal and consent sent to holders of the Notes. Completion of the Exchange Offer is conditioned upon, among other things, shareholder approval at a Special Meeting of Shareholders expected to occur in mid-August 2009. In addition to approval by shareholders, the extent of Citadel's participation in the Exchange Offer is subject to approval from E*TRADE's primary federal banking regulator, the Office of Thrift Supervision (the "OTS").
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