NYSE listed institutional FX broker KCG Holdings, Inc., announced today the completion of a $100 million principal repayment of the first lien term loan under the Company’s first lien senior secured credit facility.
With today’s announced repayment KCG has completed a total of $400 million in principal repayments on the $535 million loan, entered into on July 1, 2013 in order to finance the merger of GETCO and Knight Capital, leaving a remaining outstanding balance of $135 million. The merger now seems like a successful lifeline for Knight Capital after a potentially fatal algorithmic trading glitch that caused the firm to lose over $400 million in just 45 minutes in August, 2012.
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Steve Bisgay, Chief Financial Officer of KCG, commented in the announcement: “Given the progress achieved to date in the integration, we continue to pay down debt ahead of schedule. The total payments to date significantly reduce the interest expense going forward and will provide added flexibility in terms of deploying future liquidity.”
The firm states in the announcement that the $100 million was sourced from excess liquidity released as a result of the consolidation of KCG’s U.S. broker-dealer subsidiaries. The consolidation referred to is most likely the creation of KCG Americas December 31, 2013, replacing several other companies in the group, thus freeing up locked capital.
Under the terms of the credit facility, principal prepayments in excess of the $235 million amortization payment due July 1, 2014 will be applied to reduce the remaining scheduled amortization payments of $7.5 million each quarter beginning September 30, 2014 on a pro rata basis. Prepayments however, are permitted at any time without premium or penalty except in connection with certain refinancings.