Penson Worldwide Inc., whose pending acquisition of
Broadridge Financial Solutions Inc.’s Ridge Clearing and Outsourcing Solutions Inc. unit will make it the second-biggest correspondent-clearing firm, said late Tuesday that it will issue about $200 million of notes in a private placement.
The firm also said its first-quarter profit will range between $100,000 and $200,000, or about one cent a diluted share.
Proceeds from the planned private placement of senior second-lien secured notes will be used to pay down about $100 million of bank debt and provide working capital to help support the businesses of some 100 broker-dealer clients Penson hopes to absorb in the Ridge transaction. The new debt supplements $60 million in five-year, 8% senior convertible notes that Penson recently raised.
The firm, which earlier had indicated that it would be issuing more debt, also recently expanded its bank credit agreement to $100 million, from $70 million.
In announcing preliminary results for its first quarter, Penson estimated net income of $100,000 to $200,000, or a penny a share, on about $67.5 million of net revenue. In the comparable first quarter of 2009, Penson had earnings of $.07 a share.
Excluding about $1.3 million of pretax expenses related to buying the Ridge contracts and severance payments, Penson said net income for the first quarter was closer to $900,000, or about $.04 a diluted share. The consensus estimate of five analysts, excluding the one-time expenses, was $.06 a share.
Last month, Penson chief executive Philip Pendergraft signaled to analysts that first-quarter results would be pressured, and also said that the firm had lowered its estimate of revenue from Ridge clients to between $50 million and $60 million, from an earlier estimate of $75 million. In recent weeks,
Neuberger Berman Group LLC — one of Ridge’s biggest clients — said it was jumping to a rival clearing firm, while regulators closed down GunnAllen Financial Inc., another of that firm’s clients.
Shares of Penson, which rose five cents to $10.42 in Nasdaq trading Tuesday, were unchanged in after-hours trading following the announcement. In the last year, the shares have ranged between a low of $7.33 and a high of $12.23.
