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Screenshot of a breaking news alert e-mail from Q2 2017
Forex broker FXCM Inc (NYSE:FXCM) has filed a shelf prospectus with the U.S. Securities and Exchange Commission (SEC), indicating that the company is planning to raise in the neighborhood of $125 million in the near future.
According to the prospectus, the capital raise could be in the form of equity, debt, or some combination thereof.
A shelf prospectus filing doesn’t commit FXCM to a capital raise, nor to any specific timing for a capital raise. However, companies don’t usually make such filings unless they have a specific plan in mind to raise money, and targeted (near-term) timing. They are often filed after the company engages investment bankers in discussions to evaluate the potential for an offering of some sort.
Why file a shelf prospectus?
A shelf prospectus filing allows an issuer like FXCM to clear all their paperwork for an offering in advance with regulatory authorities. That allows the issuer (FXCM in this case) to move forward very quickly with an offering when market conditions are right, without the worry of filing and clearing a new prospectus.
Not surprisingly, FXCM put down as the first planned use of proceeds from any money raised to be targeted to ‘reduce or refinance outstanding debt‘, and to ‘redeem or repurchase certain outstanding securities‘. We would imagine that the first order of business would be to pay down FXCM’s loan from Leucadia National Corp (NYSE:LUK), on which FXCM is paying a punitively high rate of interest. And which, in our view, is the main thing keeping FXCM’s shares depressed.
The FXCM shelf prospectus filing can be seen on the SEC website here.