E*Trade To Exchange $1.7B Of Debt As Offer Tops Target

 E*Trade Financial Corp. (ETFC) said it will exchange more than $1.7 billion in convertible debentures after about $1.83 billion in senior notes were tendered to its debt-exchange offer.

Last month, the bank and online brokerage moved to exchange more than $1 billion of the new 10-year zero-coupon convertible debt for all of its 8% senior notes due 2011 and some of its 12.5% springing lien notes due 2017.

E*Trade's shares were recently down 2.2% at $1.32 in premarket trading.

The bank and online brokerage has been looking to raise capital as the company continues to deal with surging loan losses.

E*Trade said Thursday that after the early tender period, about $429.6 million of 2011 notes and $1.41 billion of 2017 notes had been tendered, including $230.2 million of 2011 notes and $1 billion of the 2017 notes tendered by affiliates of Citadel Investment Group LLC. The hedge-fund giant, which bought 90.9 million shares in the company's recent stock offering, had previously agreed to tender at least $800 million in E*Trade's long-term debt.

The Citidel portion of the exchange is $300 million bigger than what was announced Wednesday night. E*Trade said Thursday that Citadel is making the maximum of its commitment to participate in the exchange offer.

The offer remains open at least another month, but because the maximum number of 2017 notes subject to the offer has already been tendered, it is effectively only open currently to 2011 notes not already tendered. E*Trade said 97% of 2011 notes not held by Citadel and 99% of 2017 notes have already been tendered.

Also, the exchange of the 2017 notes not held by Citadel will be pro-rated as E*Trade had said it would exchange up to $310 million of those. The amount tendered thus far is $407.2 million.

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