E*Trade to sell $250 million 10-year notes as part of $1.4 billion BrownCo financing

By Paul Deckelman

New York, Nov. 4 - E*Trade Financial Corp. outlined plans Friday for a $250 million offering of 10-year senior notes as part of a $1.4 billion, three-pronged financing effort connected with its recently announced planned acquisition of the BrownCo equity trading platform from JPMorgan Chase & Co.

High yield syndicate sources said that the deal would be marketed to potential investors via a roadshow scheduled to start Monday, with pricing expected sometime during the following week (beginning Nov. 14).

The notes are being sold as a public deal under the company's existing shelf registration filed with the Securities and Exchange Commission. They will be non-callable for the first five years after issue, except for the standard equity clawback allowing the purchase of up to 35% of the issue with proceeds from any equity offering,

Morgan Stanley & Co. Inc. and J.P. Morgan Securities Inc. will be joint bookrunners on the deal, which will also have Harris Nesbitt, BNY, Piper Jaffray and Wells Fargo Securities on board as co-managers.

The notes are expected to carry a B1 rating from Moody's Investors Service and a B+ rating from Standard & Poor's.

In addition to the 10-year notes issue, E*Trade concurrently announced that it would sell $700 million of common stock and $450 million of three-year mandatory convertible securities to help fund the $1.6 billion BrownCo purchase.

Assuming that the notes sale is completed, it would be the third time in as many months that E*Trade, a New York-based financial services company will have tapped the junk bond market for fresh capital. It sold $350 million 7 3/8% senior notes due 2013 in September, and followed that up with a $250 million add-on offering of the same kind of notes, which priced Oct. 27.

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