NEW YORK, Nov. 17 /PRNewswire-FirstCall/ -- E*TRADE FINANCIAL Corporation
(NYSE: ET) ("E*TRADE FINANCIAL" or the "Company") announced today that it
priced offerings for its common stock, senior notes and equity units. The
proceeds of these securities offerings, in addition to the proceeds from the
Company's previously announced offering of $250 million of senior notes, will
be used to finance the planned acquisition of BrownCo. The offerings will be
made under the Company's existing shelf registration statement previously
filed with the Securities and Exchange Commission and are expected to close on
November 22, 2005. Morgan Stanley & Co. Incorporated and J.P. Morgan
Securities Inc. are acting as joint book-running managers for these offerings.
Common Stock
In connection with the offering of common stock, the Company is entering
into forward sale agreements with affiliates of Morgan Stanley & Co.
Incorporated and J.P. Morgan Securities Inc. as the forward purchasers. The
forward purchasers (or their respective affiliates) will borrow and sell
approximately 36 million shares of the Company's common stock. The
underwriters are offering these shares to the public at a price of $18.00 per
share. The forward sale agreements provide for settlement on a settlement
date or dates to be specified by the Company at the public offering price less
the underwriting discount (subject to adjustment). The settlement of the
forward sale agreements is expected to occur in conjunction with the closing
of the Company's acquisition of BrownCo, but in no event later than twelve
months following the date of the common stock offering. Subject to certain
exceptions, the Company has the right to elect physical, cash or net stock
settlement of the forward sale agreements. Assuming physical settlement of
the forward sale agreements on the closing date of this offering, and assuming
a forward price of $18.00 per share, the Company would receive gross proceeds
of $650 million upon settlement of the forward sale agreements, before
deducting the underwriters' discount and estimated offering expenses. In
addition, the underwriters of the common stock offering have an option to
purchase up to approximately 3.6 million additional shares of common stock,
exercisable solely to cover over-allotments.
Senior Notes
The Company is offering $300 million in aggregate principal amount of Senior
Notes due 2015. The notes will bear interest at a rate of 7 7/8% per annum and
are redeemable beginning December 1, 2010. The Company will receive gross
proceeds of $300 million from the sale of the notes, before deducting the
underwriters' discount and estimated offering expenses.
Equity Units
The Company is offering $450 million in equity units, each with a stated
amount of $25 and initially consisting of a purchase contract and a 1/40th, or
2.5 percent, undivided beneficial ownership interest in a $1,000 principal
amount subordinated note due 2018. The purchase contracts will obligate the
holders to purchase from the Company, no later than November 18, 2008, between
approximately 21 million and 25 million shares of the Company's common stock,
subject to adjustments, depending on the average closing price of the
Company's common stock over the 20 day period ending on the third trading day
prior to such date. The subordinated notes will bear interest at the rate of
6 1/8% per year, payable quarterly, subject to certain deferral provisions.
The subordinated notes will be remarketed in the future, at which time the
interest rate on the notes will be reset and thereafter interest will be
payable at the reset rate. The Company will receive gross proceeds of $450
million from the sale of the equity units, before deducting the underwriters'
discount and estimated offering expenses.
Trading of the equity units on the New York Stock Exchange is expected to
begin Tuesday, November 22, 2005, under the symbol "ET Pr."
This press release is neither an offer to sell nor a solicitation of an
offer to buy the securities described herein, nor shall there be any sale of
these securities in any jurisdiction in which such an offer, solicitation or
sale would be unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. The offering of these securities
will be made only by means of a prospectus and related prospectus supplements.
When available, copies of the prospectus and related prospective supplements
may be obtained from Morgan Stanley & Co. Incorporated, Prospectus Department,
1585 Broadway, New York, NY 10036 and J.P. Morgan Securities Inc., Addressing
Department, One Chase Manhattan Plaza, Floor 5B, New York, NY 10081.
Important Notice
E*TRADE FINANCIAL and the E*TRADE FINANCIAL logo are registered trademarks
or trademarks of E*TRADE FINANCIAL Corporation. The statements contained in
this news release that are forward-looking are based on current expectations
that are subject to a number of uncertainties and risks, and actual results
may differ materially. The uncertainties and risks include, but are not
limited to, changes in market activity, anticipated increases in the rate of
new customer acquisition, the conversion of new visitors to the site to
customers, the activity of customers and assets held at the institution,
seasonality, the development and enhancement of products and services,
competitive pressures (including price competition), system failures, economic
and political conditions, changes in consumer behavior and the introduction of
competing products having technological and/or other advantages. Further
information about these risks and uncertainties can be found in the
information included in the annual reports previously filed by E*TRADE Group,
Inc. or E*TRADE FINANCIAL Corporation with the SEC on Form 10-K (including
information under the caption "Risk Factors") and quarterly reports on Form
10-Q.
E*TRADE FINANCIAL Media Contact
Pam Erickson
E*TRADE FINANCIAL Corporation
617-296-6080
pam.erickson@etrade.com
E*TRADE FINANCIAL Investor Relations Contact
Adam Townsend
E*TRADE FINANCIAL Corporation
703-236-8719
adam.townsend@etrade.com
SOURCE E*TRADE FINANCIAL Corporation
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Related links:
http://www.etrade.com
CONTACT:
media, Pam Erickson, +1-617-296-6080, or
pam.erickson@etrade.com, or investors, Adam Townsend,
+1-703-236-8719, or adam.townsend@etrade.com, for E*TRADE
FINANCIAL Corporation
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