Summary
On February 15, 2006, The NASDAQ Stock Market, Inc. (NASDAQ) completed the redemption of all its outstanding Series C Cumulative Preferred Stock for a total of $104.7 million. This redemption was a condition subsequent to NASDAQ's common stock offering that closed on the same date. The Series C preferred stock carried a dividend rate that was set to increase significantly after July 1, 2006. The redemption payment included accrued dividends and a make-whole premium, and was paid to NASD, Inc., the sole holder of the Series C stock. This redemption is significant for investors as it terminates material covenants previously agreed upon in an Exchange Agreement with NASD, Inc. These covenants, dated November 29, 2004, had imposed restrictions on NASDAQ's ability to incur certain debt or transfer assets without NASD's consent. While NASD, Inc. remains NASDAQ's controlling shareholder, the removal of these specific covenants could provide NASDAQ with greater operational and financial flexibility moving forward.
Key Highlights
- 1NASDAQ redeemed all outstanding Series C Cumulative Preferred Stock on February 15, 2006.
- 2The total redemption cost was $104.7 million, including accrued dividends and a make-whole premium.
- 3The redemption was triggered by the closing of NASDAQ's common stock offering on the same date.
- 4The Series C preferred stock had a dividend rate that was set to increase substantially after July 1, 2006.
- 5The redemption effectively terminates restrictive covenants from a November 29, 2004, Exchange Agreement with NASD, Inc.
- 6These terminated covenants previously required NASD's consent for certain debt incurrence and asset transfers.
- 7NASD, Inc. continues to be NASDAQ's controlling shareholder despite the redemption of its preferred stock.