Gain Capital Holdings Inc (NYSE:GCAP), the parent company of Retail FX broker Forex.com and institutional FX platform GTX, looks to be gearing up for more acquisitions as the company has announced plans to raise an additional $80 million in a convertible note offering.
LeapRate readers will recall that this isn’t the first time that GAIN Capital has tapped the converts market for financing. The company raised a similar $80 million amount in November 2013, using a similar instrument.
If the underwriters exercise their over-allotment option, the offering could be increased to $92 million.
GAIN Capital stated that it intends to use a portion of the net proceeds of the offering to repay outstanding indebtedness and the balance for general corporate purposes, which may include strategic acquisitions and share repurchases.
GAIN Capital, over time, has been one of the most acquisitive Retail FX brokers. The company most recently acquired the US Retail FX assets of rival FXCM for $7 million.
J.P. Morgan and Jefferies are acting as joint book-running managers of the offering.
The full press release issued by GAIN Capital reads as follows:
GAIN Capital to Offer $80 Million of Convertible Senior Notes
BEDMINSTER, N.J., Aug. 16, 2017 /PRNewswire/ — GAIN Capital Holdings, Inc. (NYSE: GCAP) (“GAIN Capital”) today announced its intention to offer, subject to market conditions and other factors, $80 million aggregate principal amount of its convertible senior notes due 2022 in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Act”).  GAIN Capital also expects to grant the initial purchasers of the notes a 30-day option to purchase up to an additional $12 millionaggregate principal amount of the notes solely to cover over-allotments, if any.
The notes will be unsecured, senior obligations of GAIN Capital, and interest will be payable semi-annually in arrears.  The notes will be convertible at the option of holders prior to the close of business on the business day immediately preceding April 15, 2022 only upon the occurrence of specified events or under certain circumstances.  Thereafter, until the close of business on the business day immediately preceding the maturity date of August 15, 2022, the notes will be convertible at any time. Conversions of the notes will be settled by the delivery and/or payment, as the case may be, of GAIN Capital common stock, cash, or a combination thereof, at GAIN Capital’s election. Final terms of the notes, including the interest rate, initial conversion rate and other terms, will be determined by negotiations between GAIN Capital and the initial purchasers of the notes.
GAIN Capital intends to repurchase up to $15 million of its common stock from purchasers of notes in the offering in privately negotiated transactions effected through J.P. Morgan concurrently with the closing of the offering, which repurchases may be made using a portion of the net proceeds of the offering, amounts drawn under GAIN Capital’s existing credit agreement or other cash on hand or any combination thereof. These repurchases could increase, or prevent a decrease in, the market price of GAIN Capital common stock or the notes and could result in a higher effective conversion price for the notes.
GAIN Capital intends to use a portion of the net proceeds of the offering to repay outstanding indebtedness and the balance for general corporate purposes, which may include strategic acquisitions and share repurchases.
J.P. Morgan and Jefferies are acting as joint book-running managers of the offering.
This press release is neither an offer to sell nor a solicitation of an offer to buy any of these securities and shall not constitute an offer, solicitation, or sale in any jurisdiction in which such offer, solicitation, or sale is unlawful. Any offer of the securities will be made only by means of a private offering memorandum. The notes and the shares of common stock issuable upon conversion of the notes, if any, will not be registered under the Act or any state securities laws, and unless so registered, may not be offered or sold in the United Statesexcept pursuant to an exemption from the registration requirements of the Act and applicable state laws.