As the besieged online brokerage and bank likely to raise capital to drag itself out from under mortgage-related loan losses, E-Trade Financial said 435 million of its shares were priced at $1.10 a share, out of which, Citadel Investment Group bought 90.9 million shares.

Earlier in April, the Office of Thrift Supervision had asked the company to raise capital quickly after it reported a great Q1 loss. E-Trade lowered its debt and buffer itself further from loan losses could be helped only by the money from the stock offering, along with a debt exchange offer.

E-Trade foresees gross proceeds from the offering of $478.5 million. E-Trade has announced that it would sell $400 million of its stock.

The company is also planning to exchange more than $1 billion in outstanding debt. As part of the program, $800 million will be exchanged by Citadel in debt. The debt exchange would allow E-Trade to lower its debt by eliminating the interest payments.

According to the company, the offering's funds will provide additional equity capital, which would be used for other corporate purposes.

It may be noted here that the company was hit hard by the recent economic recession.

The recession also hit the real-estate market, which in turn dropped residential real-estate loans.

The offering is expected to close June 24.

Shares of E-Trade closed Thursday at $1.43 scoring a plunge of about 15 %.