Leucadia confirms negotiations with FXCM to restructure Loan Agreement terms
Leucadia confirms negotiations with FXCM explained by professional Forex trading experts the “Leucadia confirms negotiations with FXCM” FX trading team.
Leucadia confirms negotiations with FXCM
Investment holding company Leucadia National Corp (NYSE:LUK) has confirmed in its annual 10-K filing that it is holding negotiations with retail forex broker FXCM Inc (NYSE:FXCM) to restructure some of the terms of its $300 million loan made to FXCM last January.
The loan, negotiated in very short order over the weekend of January 17-18, 2015 following the January 15 spike in value of the Swiss Franc, enabled FXCM to remain open and avoid being in non-compliance with regulatory net capital requirements. The loan came with a fairly punitive initial interest rate of 10%, increasing by 1.5% each quarter up to a maximum of 20.5%. As we reported earlier, FXCM still owes Leucadia $192.7 million on the loan, as at year-end 2015.
It looks as though the negotiations between Leucadia and FXCM do not have to do with the principal/interest repayment terms, but rather the other major right Leucadia acquired – the right to a variable proportion of the sale proceeds of FXCM or FXCM assets/businesses, and the ability to require a sale of FXCM beginning in January 2018.
The ‘variable proportion’ Leucadia is slotted to receive is as follows: 100% until amounts due under the loan are repaid; 50% of the next $350 million; 90% of the next $500 million; and 60% of all amounts thereafter.
In other words – once the loan to Leucadia is repaid in full, Leucadia will then get half of any proceeds from the sale of FXCM up to $350 million, and 90% of amounts beyond that. (It is unlikely in our view that FXCM would be sold at more than $850 million). Meaning, that most of the upside in FXCM belongs to Leucadia, not to FXCM shareholders.
The ‘little upside’ fact has, in our view, been the main thing holding back FXCM shares.
Leucadia confirms negotiations with FXCM Conclusion
For more information about currency trading brokers visit TopForexBrokers.com Forex brokers comparison website, Tip ForexSQ.com foreign exchange trading
experts please by share this article about Leucadia confirms negotiations with FXCM