NASD exchanges all Nasdaq series A preferreds for new securities

By Ted A. Knutson

Washington, Dec. 1 - The National Association of Securities Dealers, Inc. exchanged all of the Nasdaq Stock Market, Inc.'s 1.34 million shares of series A cumulative preferred stock for the same number of series C cumulative preferred securities on Nov. 29.

The new preferreds pay a lower dividend initially but potentially more in the future.

The existing series A preferreds carried a 10.6% dividend, payable at the discretion of Nasdaq's board of directors. On Sept. 30, 2004, the NASD agreed to a waiver of a portion of the dividend for the third quarter of 2004 and accepted an aggregate amount of $1.0 million (calculated based on an annual rate of 3.0%) as payment in full of the dividend for that period.

The new series C preferreds will pay quarterly dividends based on a 3% annual interest rate through July 1, 2006 and 10.6% afterwards. Series C shareholders also may be entitled to an additional dividend amount on the period of time the stock is outstanding and the market price of Nasdaq's common stock when Nasdaq redeems the preferred shares.

The deal was announced in an 8-K filing with the Securities and Exchange Commission.

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