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Screenshot of a breaking news alert e-mail from Q2 2017
Global Brokerage, Inc. (NASDAQ:GLBR), formerly known as FXCM Inc, announced that 78.5% of the holders of its $172 million of outstanding Convertible Notes voted to approve the company’s reorganization plan. The plan will see GLBR enter Chapter 11 bankruptcy reorganization, with the convertible notes “converted” to become non-convertible, their interest rate hiked from 2.25% to 7%, and (most importantly) their maturity extended by five years.
GLBR needed at least two-thirds approval to go ahead with the plan.
The company noted that approval was actually unanimous, with all voting creditors voting in favor of the reorganization plan.
The bankruptcy case is expected to take no longer than sixty days.
Global Brokerage owns 50% of Retail FX broker FXCM Group. The company noted that FXCM is not involved with the Chapter 11 filing. FXCM’s customers and customer funds will not be impacted by the plan. Similarly, FXCM’s banking and trading counterparties, service providers, and other business relationships will not be impacted, with FXCM continuing to operate normally.
GLBR shares plummeted by more than 50% on Monday, after the company disclosed at the outset of the weekend that its shares would soon be delisted from the Nasdaq Capital Market. GLBR shares had inexplicably risen last week, but the company’s confirming that the shares would be delisted as of December 28 – which shouldn’t have come as a surprise to shareholders, since the move was mentioned in the original restructuring plan – took the air out of that bubble. Shareholders were reminded that those left holding GLBR shares after December 28 will find it hard to sell them.
GLBR shares had dropped to below 30 cents last week, suddenly rose on Thursday and Friday to as high as $1.50 (again, for no apparent reason other than pass-the-hot-potato speculation), and closed Monday down 54% at 52 cents. We’d also note that a number of the original FXCM team including former CEO Drew Niv and COO David Sakhai have been selling some of their remaining stake in GLBR over the past few days.