Two Holland & Knight attorneys in Miami helped a financial services company raise $73.5 million on the sale of bonds for general corporate purposes.

Partner Bradley Houser and senior associate Shane Segarra represented Ladenburg Thalmann Financial Services Inc. in issuing the bonds. The deal closed Dec. 12.

Ladenburg Thalmann is a Miami-based, publicly traded financial services company listed on the New York Stock Exchange and led by president and CEO Richard J. Lampen, a former law partner at the defunct Steel Hector & Davis. The company offers wealth and asset management; insurance, trust and estate planning; and investment banking, fixed-income trading and equity research.

The bond revenue is for general corporate purposes, but the company hasn't released the details, according to Houser.

For the issuance, Ladenburg Thalmann opted for less typical bonds, which at $25 per bond costs much less than a traditional bond — and are aptly named baby bonds. A total of 2.9 million notes were issued,

“The baby bond is a unique security. It's not as frequently issued by public companies as typical traditional bonds, which have a par value of say $1,000,” Segarra said. “When it's a registered baby bond issued to the public, a lot of times you would see it traded almost like a common stock. In this case, it was traded on the NYSE.”

“In essence, it looks and trades a lot on the exchange like an equity security with the liquidity on the market on the stock exchange. Yet it pays interest. In the case of a liquidation of the company … it has preference in liquidation over all equity and security in the company,” Houser said. “It trades on the exchange in much the same manner as an equity security” like common stock or preferred stock.

The baby bonds made this issuance more accessible to more investors, he added.

“It gives smaller investors a little bit more access to be able to buy and invest in these types of bonds because it's more accessible with the price point and the liquidity of the bond as well,” Segarra said.

That means the issuance drew a diverse pool of investors.

“It's a wide variety of investors, including some retail investors, some institutional investors, larger firms,” Segarra said.

As for why Ladenburg Thalmann chose to issue baby bonds, Houser said, ”It was to offer a debt security that would, due to its lower par value, be more readily tradeable on the NYSE.”

Like many deals, this one wasn't without its obstacles for the attorneys.

Houser and Segarra worked through the challenge of closing deal quickly enough to lock in a better interest rate for their client.

“In the last few months, we have been in an environment of increasing interest rates,” Houser said.

This was against a backdrop of expectations for the Federal Reserve to increase interest rates again this year, Segarra noted.

That added pressure on the attorneys, Houser added.

“There was a time pressure to get the deal priced and get the coupon interest rate set,” he said.

They locked in a 6.5 percent interest rate annually for their client, Houser said. This rate applies as long as the bonds due in 2027 are outstanding.

“It was a fairly smooth deal, well-received by everybody. Just like Brad said with the time pressure, that was the main challenge,” Segarra said. “But other than that, it seemed to be a pretty successful transaction.”