Plenty of options

29 November 2007 By Richard Beales Follow @richardbeales1

The $16bn hedge fund group is buying problem CDOs from E*Trade at firesale prices. It s also injecting lifesaving funds into the troubled online broker. The deal looks canny. But with Citadel s big electronic trading business, there might even be a strategic rationale one day.

This content is for Subscribers only

Context News

Citadel has injected $2.55bn in E*Trade. The hedge fund agreed to invest $1.75bn in exchange for senior unsecured notes bearing 12.5% and a 19.99% stake in the troubled online financial group. Citadel will also acquire E*Trade's entire portfolio of asset backed securities for $800m in cash. The securities have a face value of $3.1bn. Citadel will also receive one seat on E*Trade's board.

In addition, E*Trade said its embattled chief executive, Mitchell Caplan, would step down. It named Jarrett Lilien as acting chief executive officer. Donald Layton was named board chairman.

Email a friend

Please complete the form below.

Required fields *