The Wall Street Journal-20080115-Credit Crunch-Legg Mason Sells Senior Notes
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Credit Crunch:Legg Mason Sells Senior Notes
Moody's Investors Service affirmed Legg Mason's A2 senior unsecured rating following the note issuance. The rating outlook remains "negative."
Legg Mason also said it expects fiscal third-quarter per-share earnings of $1.04 to $1.09, including a charge of 16 cents related to a reduction in the market value of asset-backed commercial paper held by the company's money-market funds. Analysts polled by Thomson Financial, on average, expect per-share earnings of $1.21.
The note sale seeks to strengthen Legg's balance sheet and provide some additional funding for future spending, like on potential acquisitions.
Legg Mason said it will use a portion of the capital raised to repurchase and retire 2.5 million shares of preferred stock from Citigroup Inc.
KKR's conversion rights are at $88 per share and the company is subject to a stand-still provision under which it agreed not to purchase any Legg Mason stock without prior consent.
Scott C. Nuttall, a member of KKR, will also be recommended to be nominated to Legg Mason's board.
