Finally acting somewhat like a company which has filed for a Chapter 11 reorganization, shares of Global Brokerage Inc (NASDAQ:GLBR) slipped by 10% on Tuesday closing at an all time low of 95 cents. GLBR shares are now down 27% from when the Chapter 11 plan was released a week and a half ago.
We’d remind LeapRate readers that GLBR (when it was known as FXCM Inc.) did a 10:1 reverse split of its shares back in late 2015 – meaning that relative to its 2010 IPO price of $14, the shares are “really” now at under 10 cents.
After announcing its plans earlier this month to reorganize under Chapter 11, Global Brokerage – which owns 50% of FXCM Group – saw its shares remain fairly stable at about $1.30. The reorganization was mainly an agreement with the company’s convertible bondholders, due more than $172 million, to amend the terms of the bonds to become non-convertible, raise their interest rate from 2.25% to 7%, and (most importantly) extend their maturity by five years. Other than the higher coupon payments, GLBR shareholders didn’t really give up much in the reorg plan, which still needs to be formally approved by both the company’s shareholders and the noteholders.
As part of the reorganization negotiations, Leucadia National Corp (NYSE:LUK) gave the operating company FXCM Group a one-year extension on the loan Leucadia provided to FXCM – thereby also giving GLBR shareholders more time to extract value from the company’s holding in FXCM.
It seems as though, after having some time to digest the reorganization, GLBR shareholders are slowly coming to the realization that there’s probably “very little to nothing there” – i.e., that the company’s remaining assets including what it will receive from a future sale of FXCM will be unlikely to cover its debts, even though the maturity on those debts has been extended.