E*Trade $450 million mandatory convertibles talked to yield 5.625%-6.125%, up 20%-25%

By Rebecca Melvin

Princeton, N.J., Nov. 8 - Price talk emerged on E*Trade Financial Corp.'s planned $450 million offering of three-year mandatory convertibles, which was reiterated last week. The deal is seen yielding 5.625% to 6.125% with an initial conversion premium of 20% to 25%, according to a syndicate source.

The mandatories, which are being offered concurrently with common stock and senior note offerings, will price on Nov. 16, after the close, according to a syndicate source.

The "pretty standard" three-year convertibles have dividend protection but no takeover protection, a syndicate source said.

Morgan Stanley & Co. and J.P. Morgan Securities are acting as joint bookrunners for the offerings, which will be made under an existing shelf registration.

The three offerings, including $700 million of common stock and $250 million of senior notes, will finance the company's previously announced acquisition of BrownCo., the online brokerage service of JP Morgan, for $1.6 billion.

The senior notes portion of the financing package is smaller than originally suggested. When the company announced the deal Sept. 29, chief executive Mitchell Caplan said financing might fall along the lines of $700 million in equity, $450 million in convertibles and $450 million in senior notes and include a drawdown by $150 million of a $250 million bank revolver.

New York-based E*Trade is an online investment brokerage.

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