Leucadia books $62M gain on FXCM loan, still owed $70M at Q1-2018

Investment company Leucadia National Corp (NYSE:LUK) – which is in the process of rebranding itself to Jefferies Financial Group – has issued its 10Q quarterly report for Q1-2018, providing an update among other things on its outstanding loan to Retail FX broker FXCM Group.

In the big picture, Leucadia reported that to date (as of March 31, 2018) it has received payments of $339.8 million from FXCM since the $279 million loan was first made in January 2015. Meaning, that on a cash basis, Leucadia has booked a cumulative $61.8 million gain on its loan to FXCM.

As of the end of Q1, Leucadia is still owed another $70.4 million in principal by FXCM, which is accumulating interest at a nice rate of 20.5% per annum. At year-end 2017 the loan balance was also about $70 million, such that FXCM paid Leucadia roughly $3.5 million in interest during Q1, but didn’t make a dent in the principal. The loan comes due in about eight months, in January 2019.

And on top of that, Leucadia continues to own more than half of the economic interest in FXCM. Under an amended agreement with Global Brokerage Holdings, distributions to Leucadia in the event of the sale of FXCM are: 100% until amounts due under the loan are repaid; 50% of the next $350 million; then 90% of the next $600 million; and 60% of all amounts thereafter.

Reflecting the influence (and effective control) that Leucadia now has in the company, FXCM recently rebranded and changed up its logo, adding in the Leucadia name. Leucadia Managing Director Jimmy Hallac now serves as the Chairman of FXCM. We assume that will change again, once the Leucadia rebrand to Jefferies Financial is completed.

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