This just out. Legg is getting permanent financing through Kohlberg Kravis Roberts to buy back the Legg stock that Citigroup got when they swapped operations awhile back. KKR's Scott Nuttall will join Legg's board. This is smart. The stock owned by Citi was looming over Legg. Citi badly needs to raise capital. This is vastly preferable to Citi dumping the Legg stake on a third party. Legg stays in control, raises some capital -- which it, too, could use -- and forestalls a fire sale of at least some of the shares held by Citi -- unclear whether this is all of them.

From the press release:

-- KKR will purchase $1.25 billion of 2.5% non-voting, contingent convertible senior notes due in 2015. The notes are convertible, if certain conditions are met, into cash up to the $1.25 billion principal amount of the notes and, wiht respect to any excess conversion value, into either cash or shares of Legg Mason common stock, or a combination of cash and common stock, at the Company's option.

-- In a related transaction, Legg Mason has agreed to repurchase and retire Legg Mason preferred stock which is convertible into 2.5 million shares of its common stock that is currently owned by Citigroup Inc.

-- Chip Mason: "We carefully considered a number of options with a number of institutions, including accessing the public markets, and decided that this transaction, wiht a firm as respected as KKR, was the best option for our company and for our shareholders."