FXCM has received financing by holding firm, Leucadia National, according to media reports. The troubled FX and CFD broker reported losses on the back of the Swiss Franc crisis, thus putting the vulnerable forex broking sector in unwanted stress.
CNBC reported that Leucadia National invested $300 million cash in listed broker-dealer in exchange for $250 million in two-year senior secured notes with a 10% coupon.
It adds that if FXCM is sold, Leucadia will get 75 percent of the proceeds. The news comes as a sigh of relief for industry participants who were on the edge after Alpari UK became insolvent.
FXCM issued a note on the 15th of January late last night, informing the market that it had also suffered heavily during the CHF crisis, the firm joined fellow listed CFD provider, IG, who was the first broker to issue a note about heavy losses.
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Forex Magnates reported that FXCM was in discussion with Jefferies, a subsidiary of Leucadia National. Leucadia is a publicly traded firm that has a number of firms under its portfolio. FXCM becomes the second financial services firm as it expands its business.
FXCM’s CEO Drew Niv is reported to have issued a statement, according to CNCB, he stated: “Leucadia’s support and this financing are by far the best alternative for FXCM, our customers, our shareholders, and all other relevant constituencies.”
Richard B. Handler, Chief Executive Officer, and Brian P. Friedman, President of Leucadia, commented in a statement: “We are pleased to have been able to provide this critical financing to FXCM that is designed to maintain FXCM’s financial strength and allow it to prosper going forward. We believe this is an attractive investment for Leucadia and we look forward to a mutually beneficial relationship with FXCM management. We want to thank the entire FXCM team, with whom Leucadia and Jefferies worked over the past approximately 36 hours to achieve this solution for FXCM.”
UBS acted as financial advisor and Weil Gotshal and Manges, LLP as legal advisor to FXCM. Jefferies originated and advised Leucadia in respect of this transaction and Skadden, Arps, Slate, Meagher and Flom LLP acted as legal advisors to Jefferies and Leucadia.