The parent of investment bank Jeffries, Leucadia National (NYSE:LUK), has reported its third quarter results revealing that the company lost $128.9 million or $0.35 per share. The loss stemmed from markdowns in the value of the firm’s investments in online brokerage FXCM (NYSE:FXCM), HRG Group and some other parts of the company’s business.
The shares of the company traded lower by 3 per cent after the earnings report. Leucadia National was the company to provide an emergency credit line to FXCM back in January after the brokerage suffered substantial losses in the aftermath of the removal of the Swiss franc exchange rate floor against the euro.
With the loan coming in with ownership rights, the company had to make an adjustment to the value it was expecting to receive from the deal. Shares of FXCM have traded around $9 after a 1:10 reverse stock split was enacted last month.
FXCM on Track to Repay Outstanding Loan Balance
Leucadia National readjusted the fair value of its expected profits from the loan to the brokerage to $461 million this year. In more information relevant to the brokerage industry, the creditor of FXCM revealed that the brokerage is on track to repay its credit line to Leucadia by end of the first quarter of 2016.
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Commenting on the announcement, the CEO of Leucadia, Rich Handler, and the company’s President Brian Friedman, stated: ”Leucadia’s third quarter 2015 results were primarily impacted by the fair value adjustment decreases in FXCM and HRG.”
“As of November 4, 2015, our January net investment of $279.0 million has yielded us so far cumulative cash of $134.9 million, the remaining outstanding $195.3 million principal loan balance and our rights to participate in residual cash distributions,” the management clarified.
“We are encouraged by the direction and momentum at HRG and FXCM, and look forward to meaningful progress in the fourth quarter and 2016. We continue to receive interest and principal payments in respect of the note component of our investment in FXCM, with the remaining balance outstanding expected to be repaid by the end of the first quarter of 2016.”
Shares of FXCM have rallied almost 4 percent after the announcement made by Leucadia National.