E*Trade Preferreds! FTL or FTW?

Whoever answers my question gets 5,000 shares of wamuq!
Taken from E*Trade's prospectus on their Equity Units. Is it just me or in November, do equity holder have to buy common stock @ $25ish a share?

Corporate unit = equity unit



Purchase of Common Stock



Each purchase contract that is a part of a Corporate Unit or a Treasury Unit will obligate its holder to purchase, and us to sell, on November 18, 2008, the purchase contract settlement date (unless the purchase contract terminates prior to that date or is settled early at the holder’s option), a number of shares of our Common Stock equal to the settlement rate, for $25 in cash. The number of shares of our Common Stock issuable upon settlement of each purchase contract on the purchase contract settlement date (which we refer to as the “settlement rate”) will be determined as follows, subject to adjustment as described under “—Anti-Dilution Adjustments” below:


(1) If the applicable market value of our Common Stock is greater than or equal to $21.8160, the “threshold appreciation price,” the settlement rate will be 1.1459 (the “minimum settlement rate”).


Accordingly, if the market value for the Common Stock increases between the date of this prospectus supplement and the period during which the applicable market value is measured and the applicable market value is greater than the threshold appreciation price, the aggregate market value of the shares of Common Stock issued upon settlement of each purchase contract will be higher than the stated amount, assuming that the market price of the Common Stock on the purchase contract settlement date is the same as the applicable market value of the Common Stock. If the applicable market value is the same as the threshold appreciation price, the aggregate market value of the shares issued upon settlement will be equal to the stated amount, assuming that the market price of the Common Stock on the purchase contract settlement date is the same as the applicable market value of the Common Stock.


(2) If the applicable market value of our Common Stock is less than the threshold appreciation price of $21.8160 but greater than $18.00, the “reference price,” the settlement rate will be a number of shares having a value, based on the applicable market value, equal to $25.


Accordingly, if the market value for the Common Stock increases between the date of this prospectus supplement and the period during which the applicable market value is measured, but the applicable market value does not exceed the threshold appreciation price, the aggregate market value of the shares of Common Stock issued upon settlement of each purchase contract will be equal to the stated amount, assuming that the market price of the Common Stock on the purchase contract settlement date is the same as the applicable market value of the Common Stock.


(3) If the applicable market value of our Common Stock is less than or equal to the reference price of $18.00, the settlement rate will be 1.3889 (the “maximum settlement rate”).


Accordingly, if the market value for the Common Stock decreases between the date of this prospectus supplement and the period during which the applicable market value is measured and the applicable market value is less than the reference price, the aggregate market value of the shares of Common Stock issued upon settlement of each purchase contract will be less than the stated amount, assuming that the market price on the purchase contract settlement date is the same as the applicable market value of the Common Stock. If the applicable market value is the same as the reference price, the aggregate market value of the shares will be equal to the stated amount, assuming that the market price of the Common Stock on the purchase contract settlement date is the same as the applicable market value of the Common Stock."

 

yes, you are correct. you will have to purchase the shares on November 18, the number of shares will depend on the stock price on the settlement date.

 

The amount of shares doesn't really matter to me I guess. But im getting the impression I will have to purchase them at a set rate? Or will it be the market rate?

 

bump :eek: