Global Brokerage Inc. (GLBR)

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LUK and FXCM both have a vested interest in the future of FXCM. LUK seems to be targeting a sals in about 3 years. Sounds like the stock is not going away. "Presumably by that time, FXCM will be a much stronger and more attractive company."


FXCM's deal with LUK is also effectively a delayed sale. FXCM can do little financially without LUK's permission. FXCM's financial priorities must focus in on servicing its debt. LUK can compel FXCM to make prepayments on its loan from financing events like debt or equity issuances. I am hoping the 8K will clarify whether LUK can compel FXCM to initiate such financing activities. Clearly, with the stock closing Tuesday at $1.60/share, an equity deal is off the table for a good while.

LUK seems to be targeting a sale in about three years. Presumably by that time, FXCM will be a much stronger and more attractive company. The deal includes a multi-tiered distribution plan upon sale of the new company formed to handle the transaction with LUK. The wording suggests that the plan is to sell the new company at the end of this deal. The distribution plan remains in place "until the sale of Newco." There is no duration cut-off beyond which FXCM is allowed to continue to operate without a sale (again, hopefully the 8K filing will provide further clarity).

In addition, FXCM, Holdings and Newco have agreed that beginning in three years and thereafter, upon the request of Leucadia or its assignees, they will cause the sale of Newco at the highest reasonably available price. Upon the occurrence of such event, Newco will pay Leucadia and its assignees…

Since Newco has been assigned all the equity interest of FXCM and its subsidiaries, FXCM has strong incentive in the next three years to maximize the value of the company (note that the founders and management owned 44% of the company going into this deal).