Reuters: Private Equity: UPDATE 1-Legg Mason will buy back KKR stake, take charge

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UPDATE 1-Legg Mason will buy back KKR stake, take charge May 16th 2012, 15:28 Wed May 16, 2012 11:28am EDT May 16 (Reuters) - Legg Mason Inc said it plans to buy back a stake in itself held by private equity firm KKR & Co LP and buy back additional stock, driving its shares up over 7 percent. KKR had purchased $1.25 billion in convertible senior notes in the Baltimore asset manager in 2008. Legg Mason said on Wednesday it will repurchase the senior notes and expects to take a non-cash charge of between $70 million and $80 million in its fiscal first quarter due to the early extinguishment of the notes. Legg Mason also said its board of directors has authorized $1 billion for the additional repurchase of shares. In addition, KKR executive Scott Nuttall will step down from Legg Mason's board of directors. Share of Legg Mason were up 7.5 percent in late morning trading to $24.06. In a note to investors, Gabelli & Co analyst Mac Sykes called the news "a positive development" for Legg Mason, which has just finished a round of cost-cutting to cope with a continued outflow of investor cash from its mutual funds. Wednesday's announcement "further reduces corporate uncertainties about the balance sheet, which should enable management to sharpen focus on operations and asset gathering," Sykes wrote.

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