Leucadia National (NYSE:LUK) has reported its earnings after the bell on Wednesday showing that the value of the company’s investment into online foreign exchange and CFDs trading brokerage FXCM Inc (NYSE:FXCM) has been adjusted lower.
According to the company’s estimates the figure has dropped by $47.9 million during the quarter, reflective of the drop in the value of the shares of the company. Through the end of the second quarter, Leucadia National (NYSE:LUK) has committed a net investment of $279.0 million into the brokerage.
Leucadia marked an unrealized $47.9 million reduction to the fair value of the investment in FXCM
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So far FXCM Inc (NYSE:FXCM) has managed to return a total of $160.9 million, with the remainder of the principal balance of the loan to the online brokerage standing at $192.5 million. The amount is only marginally lower than what FXCM had to relay to Leucadia National in September last year. The lender expects the full repayment of the loan to occur sometime in 2017.
According to the report, the earnings of FXCM Inc (NYSE:FXCM) to repay its loan will come from the continuation of the sale of non-core assets for the company. Generating operational cash flow will also be a key factor in the conclusion of the deal between the companies. The companies will be completing a set of previously announced changes to the loan agreement during the current quarter.
Commenting on the FXCM Inc (NYSE:FXCM) deal, Rich Handler, CEO of Leucadia, and Brian Friedman, President of Leucadia, said: “Our good results were offset by continued volatility in our fair value adjustments, including an unrealized $47.9 million reduction to the fair value of our FXCM investment (reducing our cumulative gains to $390.3 million).”
Back in January 2015, Leucadia National (NYSE:LUK) came to the rescue of the aiming brokerage FXCM, which lost a substantial amount of capital due to credit lines gone bad in the aftermath of the Swiss National Bank’s decision to drop the floor on the EUR/CHF exchange rate.