Legg Mason to sell $1 billion in special class of stock

The investment manager plans to sell 20 million "equity units" for $50 each.

Each equity unit is a contract entitling the holder to buy a share of Legg Mason's stock and 1/20 of a $1,000 bond that matures in 2021.

The company said it planned to use money raised from the sale for "general corporate purposes," as well as continuing to provide support to its money-market funds.

Legg Mason, which manages $950.1 billion of clients' money, lost $255.5 million in the fiscal fourth quarter because it needed to commit money toward possible bailouts of funds stung by tumultuous capital markets.

The company also has $425 million in bonds maturing in July.

Legg Mason has $1.19 billion in readily accessible cash, an amount that will swell to $2.16 billion if the sale is successful.

How much the stock can be bought for and what interest rate the bonds will pay is yet to be negotiated. Citi, Merrill Lynch, Goldman Sachs and JPMorgan are running the sale. Those underwriters will be granted options to purchase up to 3 million additional equity units for a total of $150 million.

Legg Mason estimates that after paying underwriters' fees, the company will collect $967 million from the sale.

The company earlier this year raised $1.25 billion by selling a special class of bond to private equity firm Kohlberg Kravis Roberts.