Tuesday, June 23, 2009

Notable financing(ETFC)

AlphaNinja - Etrade(ETFC) is up about 7% after announcing what looks to be a pretty good refinancing effort. The stock is trading around 1.26, which is near where the newly issued zero coupon (meaning they pay no annual interest) bonds would convert to stock --->>> usually the stock would open above these levels, but in this case the rest of the market appears to be able to buy in at the same price.

Last week they netted about $455m in a common stock offering. A positive is that a (BIG)participant in the offering was Citadel, the investment manager that holds a huge about of the company's expensive bonds.




Last night, Etrade announced that they're going to exchange some of their priciest 2017 debt for convertible securities that thankfully do not pay annual interest, instead converting into common stock. Dilutive, sure - but this is an example of "survival capital," not regular financing. With the attractiveness of the new financing, plus the active common stock purchases by Citadel, this looks to be a good sign for ETFC common stock going forward.

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