E*TRADE Swaps $1.8 Billion In Debt For New Convertible Bonds

Posted Jul 3, 2009

E*TRADE Financial Corporation (NASDAQ:ETFC) has successfully completed a debt exchange offer.  E*TRADE received a commitment from creditors to swap $1.8 billion in debt for convertible bonds.

The conversion was accepted for the following reasons:

– The new bonds do not bear interest as zero coupons.  Class A debentures can be converted into E*Trade’s stock at a rate of $1.034 per share.
– E*Trade’s largest shareholder Citadel had already commited to the deal which encouraged other investors.
– Creditors realized that because there are greater capital requirements on the horizon, this would be a good way to keep E*TRADE from buckling down their services.

E*TRADE is struggling to keep up the competition with Ameritrade and Charles Schwab.  E*TRADE will be posting another loss this year. E*TRADE has applications built on the iTunes App Store and BlackBerry App World.

[via Fool.com]