Legg Mason begins exchange offer for convertible equity units

By Angela McDaniels

Tacoma, Wash., July 15 - Legg Mason, Inc. is offering to exchange up to 21.85 million, or 95%, of its outstanding equity units for shares of common stock and cash, according to a company news release.

Each unit consists of (a) a purchase contract obligating the holder to purchase from the company shares of its common stock and (b) a 5% undivided beneficial interest in $1,000 principal amount of the company's 5.6% senior notes due June 30, 2021.

Holders who exchange will receive 0.8881 of a Legg Mason share and $6.25 in cash for each $50.00 unit.

Legg Mason stock closed at $24.89 (NYSE: LM) on July 15, giving the offer a value of $28.35 per unit.

No separate payment will be made for accrued contract adjustment payments or accrued interest payments with respect to the tendered units.

The company said it is holding the exchange offer in order to increase its equity capital levels and reduce the amount of its outstanding debt and related interest expense.

The exchange offer will expire at 12:01 a.m. ET on Aug. 12.

The completion of the exchange offer is subject to the effectiveness of the registration statement relating to the exchange offer filed with the Securities and Exchange Commission and the continued listing on the New York Stock Exchange of the units that remain outstanding after the exchange offer, which may require proration of tendered units.

The exchange offer is not conditioned on any minimum number of units being tendered.

The company noted that it is only offering to exchange equity units in the form of corporate units in the exchange offer. It is not offering to exchange any equity units in the form of Treasury units.

The lead dealer manager and structuring agent is Citi (call Guy Seebohm at 212 723-7179), with Banc of America Securities LLC and JPMorgan as co-dealer managers.

MacKenzie Partners, Inc. (212 929-5500 or 800 322-2885) is the information and exchange agent.

Legg Mason is an asset management firm based in Baltimore.

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