Editor's Note: The following piece was written by Minyan Peter, the author of such articles as Discover's Goodwill Hunting and The Treasury's Speed Bumps.


If “God is in the details” then everyone should read the details of the E-Trade (ETFC)/Citadel transaction outlined in last night’s E-Trade SEC filing.

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• The $1.75 billion 12.5% “unsecured” notes reported in the press release last week are really 12.5% “springing lien” notes, positioning Citadel and BlackRock (BLK) to become senior creditors under certain events; and Citadel will trade $186 million of existing unsecured debt for additional “springing lien” notes.
  
  
• There are no net proceeds for the 19.9% new common stock issued to Citadel/BlackRock.
  
  
• Citadel/BlackRock will receive a $50,000,000 “commitment” fee.
  
  
• $1.55 billion of note proceeds went into E-Trade Bank as equity capital.
  
  
• E-Trade’s $250 million revolving credit facility with JP Morgan (JPM) and Morgan Stanley (MS) was terminated.
  
  
• Citadel/BlackRock have the right to “syndicate” their deal.
  
  
• All E-Trade option trades and 40% of its brokerage trades will be routed through Citadel.