Stilwell Financial is readying a $137.5 million bond offering as part of a strategy intended to pay off bondholders and prevent dilution of its stock. Last year the parent of Janus and Berger Funds issued zero-coupon convertible bonds to raise cash in part to purchase shares from Janus founder Thomas Bailey.

Those bonds feature a put that may be exercised on the one-year anniversary of their issue, April 30, 2002. They may also be put on the third and fifth anniversary and every five years thereafter. Stilwell has told bond holders that they will be paid in cash if they put the bonds. The bonds let Stilwell make the payment in either cash or stock. Altogether, there are $697 million of the convertible bonds outstanding.

The size of the new offering hints that Stilwell expects a minority share of the convertible bonds to be put back to it. Any funds left from the new offering will be used for general corporate expenses, according to the firm.

Salomon Smith Barney lead the new offering of The Public Income NotES (PINES). The notes are mature in 2032 are will be issued in $25 denominations and sold through retail financial consultants. They are callable after five years at a par of $25 plus accrued and unpaid interest.

Stilwell has been active on the corporate finance front due to a pair of events that have intensified its need for cash even as it has been hit with falling revenues from its fund units.

At the same time it has been faced with succession issues at Janus as Bailey and other senior executives cash out their shares. Stilwell has been actively purchasing those stakes, in part to redistribute them to the next generation of leaders at the firm.

Separately, Janus announced that it ended March with $189 billion of assets under management. This figure is down from $206 billion in March of 2001 and $294 billion during the first quarter of 2000.

Assets at Janus declined primarily because of the collapse in equity prices and not because of meaningful outflows, according to company reports.  

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