eTrade 2012 Annual Report Download - page 157

The Company used the net proceeds from the issuance of the 6% Notes and 6
3
⁄ 8 % Notes to redeem all of its
outstanding 7
7
⁄ 8 % senior notes due December 2015 (“7
7
⁄ 8 % Notes”) and 12
1
⁄ 2 % springing lien notes due
November 2017 (“12
1
⁄ 2 % Springing lien notes”), including paying the associated redemption premiums, accrued
interest and related fees and expenses. The Company recorded $256.9 million in losses on early extinguishment
of debt related to the redemption of the 7
7
⁄ 8 % Notes and 12
1
⁄ 2 % Springing lien notes for the year ended
December 31, 2012.
0% Convertible Debentures due August 2019 (“0% Convertible Debentures”)
In 2009, the Company issued an aggregate principal amount of $1.7 billion in Class A convertible
debentures and $2.3 million in Class B convertible debentures (collectively “convertible debentures” or “0%
Convertible debentures”) of non-interest-bearing notes due August 2019, in exchange for $1.3 billion principal of
the 12
1
⁄ 2 % Springing lien notes and $0.4 billion principal of the 8% senior notes due June 2011.
The Class A convertible debentures are convertible into the Company’s common stock at a conversion rate
of $10.34 per $1,000 principal amount of Class A convertible debentures and the Class B convertible debentures
are convertible into the Company’s common stock at a conversion rate of $15.51 per $1,000 principal amount of
Class B convertible debentures. The holders of the convertible debentures may convert all or any portion of the
debentures at any time prior to the close of business on the second scheduled trading day immediately preceding
the maturity date.
During the years ended December 31, 2012 and 2011, $0.4 million and $660.9 million of the Company’s
convertible debentures were converted into less than 0.1 million and 63.9 million shares of common stock,
respectively. As of December 31, 2012, a cumulative total of $1.7 billion of the Class A convertible debentures
and $2.2 million of the Class B convertible debentures had been converted into 164.1 million shares and
0.1 million shares, respectively, of the Company’s common stock.
Ranking and Subsidiary Guarantees
All of the Company’s notes rank equal in right of payment with all of the Company’s existing and future
unsubordinated indebtedness and rank senior in right of payment to all its existing and future subordinated
indebtedness.
In June 2011, certain of the Company’s subsidiaries issued guarantees on 6
3
⁄ 4 % Notes and 0% Convertible
debentures. E*TRADE Bank and E*TRADE Securities LLC, among others, did not issue such guarantees.
Corporate Debt Covenants
Certain of the Company’s corporate debt described above have terms which include financial maintenance
covenants. As of December 31, 2012, the Company was in compliance with all such maintenance covenants.
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