Legg to take new charges for money-funds support

* To take $2.24/share charge in qtr

* Renews for one year total return swap agreement

* Identifies $100 mln in cost savings

BOSTON (Reuters) - Legg Mason Inc(LM.N) said on Monday it will book new charges in the current quarter for lending support to its ailing money-market funds, a move that may push the U.S. asset manager into a fourth straight quarterly loss.

The second-biggest publicly traded asset manager said in a statement it would incur a gross charge of $523 million in the current quarter for backing its money-market funds which had exposure to risky securities issued by structured investment vehicles (SIVs).

Net of adjustments to operating expenses and taxes, the charges amount to $316 million, or $2.24 a share, it said.

Baltimore-based Legg also said it had renewed for one year a total return swap with a bank that would support $355 million of SIV securities. It also announced that it had revised its existing debt covenants.

Some analysts had expressed doubts just last week whether Legg would be be able to renew the swap agreement and if it would be able to meet all its debt covenants.

"Today's actions give us financial and operating flexibility to handle potential further market deterioration. We are actively pursuing a number of options to eliminate exposure to SIVs in the money-market funds," Legg Chief Executive Mark Fetting said in the statement.

Legg said the par value of SIV exposure in its funds was $2.8 billion as of Nov. 30 compared with $10 billion as of Oct. 31, 2007.

Before Monday, Legg had put up more than $1.7 billion over the past year to support money-market funds that invested in risky asset-backed commercial paper issued by SIVs. It booked charges for the support, causing three straight quarters of losses.

It also raised more than $2 billion of capital in two rounds this year and has said it has ample capital to support its money-market funds. But some investors have worried that Legg may need to raise more capital, diluting their holdings.

Legg also said on Monday it has identified more than $100 million in cost reductions and is on track to meet its target of $120 million in annualized corporate expense savings by March 31.

Legg shares ended 17.2 percent lower at $14.92 on Monday, ahead of the news, in a very weak overall market.

(Reporting by Muralikumar Anantharaman; editing by Gunna Dickson)