GAIN To Issue $65 million Convertible Note In a Bid to Raise Funds
GAIN Capital intends to offer a convertible note valued at $65 million. The listed FX broker dealer issued a press
Leading online FX and CFD trading provider, GAIN Capital (GAIN), has announced that it intends to offer a $65 million aggregate principal of its convertible senior notes due 2018 to qualified institutional investors, subject to regulatory approval. The listed firm, headquartered in Bedminster, New Jersey will use the proceeds to repay debt and use the capital for potential acquisitions.
GAIN Capital’s announcement comes a day after arch rival, FXCM, made a press release about changes in its credit facility. Both convertible notes and credit facility are signs of a firm’s intention to either pay debt or raise cash for strategic growth and development. The two US giants have both been involved in acquisitions this year, GAIN purchased GFT and FXCM made a string of purchases with Faros and Infinium Note.
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The official press briefing outlines details of the issuance made by GAIN, it states: “The notes will be unsecured, senior obligations of GAIN Capital, and interest will be payable semi-annually. The notes will be convertible at any time prior to the close of business on the business day immediately preceding June 1, 2018 only upon the occurrence of specified events; thereafter, until the close of business on the business day immediately preceding the maturity date of December 1, 2018, the notes will be convertible at any time.”
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Convertible notes (bonds or debt) are issued by firms as they give investors the option to convert the debt into shares. In addition they have numerous advantages for investors including; offering a higher yield than those obtainable on the shares into which the bonds convert. The debt instruments have an element of safety as they provide asset protection, on the upside there are possibilities of high equity-like returns.
Corporate debt is commonly issued by firms in financial markets, in 2009 ETrade issued a $1 billion senior note after suffering on the back of mortgage back securities. Earlier this year in May, FXCM issued debt valued at $125 million.
News of the debt issuance was taken negatively by the market as shares for GAIN opened lower on Thursday and are currently trading down 15% to $9.01.
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What is the actual process of issuing this corporate debt? Seems like any [public] company can just create funding out of thin air. Any insight as to the specifics of how this is done?
What is the actual process of issuing this corporate debt? Seems like any [public] company can just create funding out of thin air. Any insight as to the specifics of how this is done?
It will be interesting to see what the rate is on the notes once issued. Gain’s stock price run up has certainly helped their capital base and raised awareness of GCAP in the marketplace. But one could argue that the run in global equities is behind a good part of GCAP’s run. If these unsecured notes show up as hi-yield or standard corporate rates will be a good tell of what the fixed-income markets make of Gain Capital.
It will be interesting to see what the rate is on the notes once issued. Gain’s stock price run up has certainly helped their capital base and raised awareness of GCAP in the marketplace. But one could argue that the run in global equities is behind a good part of GCAP’s run. If these unsecured notes show up as hi-yield or standard corporate rates will be a good tell of what the fixed-income markets make of Gain Capital.
almost Ron. Modus operandi in the market is to sell shares in advance of a convert.. the rationale being u will own the shares thru the convert.. fairly standard see http://ink.library.smu.edu.sg/cgi/viewcontent.cgi?article=1039&context=etd_coll pressing need was likely to pay off the GFT entourage who are probably loath to own GCAP stock. have to think the master Global assets people are not happy or have swapped their equity for the bonds.. either way the MGA crew must now understand the vagaries of dealing in illiquid shares.
almost Ron. Modus operandi in the market is to sell shares in advance of a convert.. the rationale being u will own the shares thru the convert.. fairly standard see http://ink.library.smu.edu.sg/cgi/viewcontent.cgi?article=1039&context=etd_coll pressing need was likely to pay off the GFT entourage who are probably loath to own GCAP stock. have to think the master Global assets people are not happy or have swapped their equity for the bonds.. either way the MGA crew must now understand the vagaries of dealing in illiquid shares.
was there any word why Mr. osullivan was stripped of his global head of trading title?
was there any word why Mr. osullivan was stripped of his global head of trading title?
well where gcap concerned expect all outward appearances to be pristine w/the behind the scenes being less so. conversion at 12 not a vote of confidence from management looking to sell stock below the 52 wk high sounds like the company happy to sell shares… shabat shalom
well where gcap concerned expect all outward appearances to be pristine w/the behind the scenes being less so. conversion at 12 not a vote of confidence from management looking to sell stock below the 52 wk high sounds like the company happy to sell shares… shabat shalom