E*Trade intends to pay May interest on 12½% notes due 2017 in cash

By Jennifer Chiou

New York, May 5 - E*Trade Financial Corp. plans to make a cash payment for the May interest due on its 12½% springing-lien notes due 2017 despite having the option to pay in kind, according to a 10-Q filing with the Securities and Exchange Commission.

E*Trade said in the filing that the May interest period is the last for which it may choose to pay interest either in cash or in kind, and as such, it is considering the payment "more specifically as [it approaches] the interest payment date."

Based on the balance of the notes as of the end of March, the interest payments are roughly $116 million per year.

The company said that during the second quarter of 2008, it elected to make its first interest payment of $121 million in cash. During 2008 and 2009, it elected to make its second, third and fourth interest payments of $121 million, $129 million and $55 million, respectively, in the form of additional 12½% notes.

Going forward, the company will pay the November payment and all remaining interest payments in cash.

E*Trade is a financial services company based in New York.

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