In its quarterly earnings report, Leucadia National Corporation (NYSE:LUK) announced that it has already started receiving loan repayments from FXCM Inc (NYSE:FXCM) after it provided a critical lifeline to the foreign exchange brokerage in the aftermath of the Swiss National Bank havoc.
The creditor company detailed in its earnings announcement that it expects FXCM Inc (NYSE:FXCM) to repay more than $75 million, or over a quarter of the loan within three months from the announcement made in January.
The details provided by Leucadia National shed light on the progress being made by FXCM on its loan repayment. According to the agreement between the companies, FXCM Inc (NYSE:FXCM) would incur a penalty of $30 million if it fails to reduce the principal of the loan to below $250 million before the 16th of April.
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From the details provided by Leucadia, it looks like FXCM Inc (NYSE:FXCM) is on track with the effort and is striving to over-deliver on repayments in order to mitigate the impact of interest rate increases on the two-year loan it secured from Leucadia after announcing a $225 million loss from the Swiss National Bank turmoil.
The terms of the agreement between Leucadia National and the foreign exchange broker revealed a quarterly interest rate hike of 1.5% limited to a maximum of 20.5%.
The repayment effort by FXCM looked increasingly challenging after December’s CFTC data showed that retail forex funds held at the brokerage in December decreased by 12%, while according to initial data, the firm experienced an outflow of $332 million of client funds in the immediate aftermath of the Swiss franc debacle when compared to data from the firm’s last quarterly report dating to September 3o.