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E*TRADE Financial Corporation Message Board

  • hermes4trading hermes4trading Jun 15, 2012 11:24 AM Flag

    650 Million remaining on Springer loan?

    12 1 / 2 % Springing Lien Notes due November 2017

    In 2007 and 2008, the Company issued an aggregate principal amount of $1.8 billion and $150 million of 12 1 / 2 % Notes, respectively. Interest is payable semi-annually and the notes are non-callable for five years and may then be called by the Company at a premium, which declines over time. The Company had the option to make interest payments on its 12 1 / 2 % Notes in the form of either cash or additional 12 1 / 2 % Notes through May 2010. In 2008, the Company elected to make its May interest payment of $121 million in cash and its November interest payment of $121 million in the form of additional 12 1 / 2 % Notes. In 2009, the Company elected to make both the May and November interest payments of $128.5 million and $54.7 million, respectively, in the form of additional 12 1 / 2 % Notes. In 2010, the Company made both the May and November interest payments in cash.

    The indenture for the Company’s 12 1 / 2 % Notes requires the Company to secure the 12 1 / 2 % Notes with the property and assets of the Company and any future subsidiary guarantors (subject to certain exceptions). The requirement to secure the 12 1 / 2 % Notes will occur on the earlier of: 1) the date on which the 8% Notes are redeemed; or 2) the first date on which the Company is allowed to grant liens in excess of $300 million under the 8% Notes. The requirement to secure the 12 1 / 2 % Notes is limited to the amount of debt under the 12 1 / 2 % Notes that would trigger a requirement for the Company to equally and ratably secure the existing 8% Notes, 7 3 / 8 % Notes and the 7 7 / 8 % Notes.

    In 2009, $1.3 billion of the 12 1 / 2 % Notes were exchanged for an equal principal amount of the newly-issued non-interest-bearing convertible debentures. Refer to the Debt Exchange section above for more details.

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    • Take a look at this, Gringo:

      https://investor.etrade.com/debt.cfm

      Da debt is $930,230,000.00 and the premium for a payoff December 1, 1012 is 12.5%....

      making the total payoff $1,046,508,700. The hit to earnings and capital would be defeating. They could easily refin at much lower rates, though...

      BUT, maybe they could do an offer to call in the notes but GIVE warrants for the premium? ANYBUTTY comment on this?

      • 1 Reply to potato_brane
      • I am sure the recent mixed shelf is to deal with this debt when it becomes callable. In today's market, no need to pay 12.5% . I would imagine they would also deal with the callable 243M at 7&7/8 at this time as well. If etfc can increase earnings enough to meet its competitors, it can easily add some share dilution to take care of this problem. We have about 1/2 the share count of AMTD and 1/4 of SCHW. Maybe the uncertainty is what is keeping us down? I think everyone understands it is the best thing to do. All that interest savings will drop to the bottom line in 2013.

 
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