FXCM (NYSE:FXCM) has announced in the earlier this year that it has been ahead of schedule with its bailout loan repayment to Leucadia National Corp already this year, however the latest reports of a write down come as a stark surprise, according to a Bloomberg report.
Back in January, FXCM faced dire straights on the back end of a snap decision from the Swiss National Bank (SNB) that convulsed currency markets worldwide, as well as FXCM. A subsequent $300 million rescue loan from Leucadia helped stabilize FXCM, which the broker has been keen to repay.
Back in April, FXCM had already paid back an additional $54 million of its loan to Leucadia – the repayment helped allay a contingent financing fee of $30 million. At the time, the payment was partially funded with proceeds from the sale of FXCM Japan to Rakuten Inc.
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Speaking at the time in a statement on the repayment schedule, FXCM’s CEO Drew Niv noted, “We are ahead of plan and the results of the FXCM Japan sale exceeded our expectations. With all the increased attention to our other properties, we are expecting robust and competitive auctions for the other non-core assets we have targeted to sell.”
Overall, the $300 million rescue loan and associated rights for FXCM are now valued at $759 million, according to a New York-based parent of Jefferies Group in a regulatory filing – FXCM itself had valued the investment at $947 million as of March 31.
Indeed, this was reflective in a recent Q2 2015 financial statement from Leucadia, which reiterated, “Our January net investment of $279.0 million has yielded us so far cumulative cash of $94.5 million, the remaining outstanding $228.4 million principal loan balance and our rights to residual cash distributions. Reflecting a reduction in the share price of FXCM, at the end of the second quarter, we reduced the fair value carrying amount of our investment in FXCM by $112.1 million.”
In light of the development however, investors showed little confidence in the announcement, as FXCM (NYSE:FXCM) shares once again withered to $1.09 per share at the time of writing during American trading, just above a 52-week low of $1.01.