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GAIN Capital Reveals Financial Details of Convertible Notes Offering

GAIN Capital, the US securities expert behind Forex broker, has just published details regarding the convertible notes offering of which we informed you just a couple of days ago. 

For openers, let's stress that the convertible notes worth is raised to $70 million, instead of the $65 million previously announced, with the sales to close on November 27, 2013. The notes will bear an annual interest of 4.125%, which will be paid twice a year – on June 1 and December 1. The conversion rate will start at 83.3333 shares of GAIN's common stock per $1,000 principal amount of the notes.
The company expects the net proceeds from the offering to be $67.5 million, following discounts for the initial buyers and expenses incurred by GAIN. But the more interesting part is for what the money will go. GAIN says the proceeds will be used for:
- repaying outstanding debts of $33.2 million;
- repurchasing 612,430 shares of its own common stock;
- funding future acquisitions.
The last point is rather interesting as it shows that about 45% of the sum raised through the notes offering will go for M&A. We cannot wait to see what will be the next target of the leading US financial group.
Below you can see the official press release.
GAIN Capital Prices $70 Million Convertible Senior Notes Due 2018
BEDMINSTER, N.J., Nov. 22, 2013 /PRNewswire/ -- GAIN Capital Holdings, Inc. (NYSE: GCAP) announced today the pricing of its upsized offering of $70 million aggregate principal amount of Convertible Senior Notes due 2018 (the "notes") in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Act").  GAIN Capital also granted the initial purchasers of the notes a 30-day option to purchase up to an additional $10 million aggregate principal amount of notes solely to cover over-allotments.  The sale of the notes is expected to close on November 27, 2013, subject to customary closing conditions.
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GAIN Capital expects that the net proceeds from this offering will be approximately $67.5 million, after deducting discounts to the initial purchasers and estimated offering expenses payable by GAIN Capital.  GAIN Capital intends to use the net proceeds of the offering to repay $33.2 million principal amount of outstanding indebtedness, which will be repaid at a $2.0 million discount, to repurchase 612,430 shares of common stock at an aggregate purchase price of $5.4 million pursuant to its previously announced share repurchase program, and for general corporate purposes, which may include strategic acquisitions.  Of the 612,430 shares of common stock so repurchased, 50,000 shares were repurchased in open market transactions executed in accordance with Rule 10b-18 under the Securities Exchange Act of 1934, and 562,430 shares were repurchased after regular trading hours from purchasers of the notes in privately negotiated transactions.
Jefferies LLC and Keefe, Bruyette & Woods, a Stifel Company, acted as joint book-running managers of the offering.
The notes will be unsecured, senior obligations of GAIN Capital, and will bear interest at a fixed rate of 4.125% per year, payable semiannually in arrears on June 1 and December 1 of each year, beginning on June 1, 2014.  The notes will be convertible at any time prior to the close of business on the business day immediately preceding June 1, 2018 only upon the occurrence of specified events; thereafter, until the close of business on the business day immediately preceding the maturity date of December 1, 2018, the notes will be convertible at any time.  Conversions of the notes will be settled by the delivery and/or payment of GAIN Capital common stock, cash, or a combination thereof, at GAIN Capital's election (subject to certain limitations).  The conversion rate will initially be 83.3333 shares of GAIN Capital's common stock per $1,000 principal amount of the notes (equivalent to an initial conversion price of approximately $12.00 per share of common stock).  The conversion rate and the corresponding conversion price will be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest, except in limited circumstances. 
If GAIN Capital undergoes a fundamental change (as defined in the indenture governing the notes), holders may require GAIN Capital to repurchase for cash all or part of their notes at a purchase price equal to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.  In addition, if a make-whole fundamental change (as defined in the indenture governing the notes) occurs, GAIN Capital may be required in certain circumstances to increase the conversion rate for any notes converted in connection with such make-whole fundamental change by a specified number of shares of its common stock.

About GAIN Capital

GAIN Capital Holdings, Inc. (NYSE: GCAP) is a global provider of online trading services. GAIN's innovative trading technology provides market access and highly automated trade execution services across multiple asset classes to a diverse client base of retail and institutional investors.
 GAIN's businesses include, which provides retail traders around the world access to a variety of global OTC financial markets, including forex, precious metals and CFDs on commodities and indices; GTX, a fully independent FX ECN for hedge funds and institutions; OEC, an innovative online futures broker; and GAIN Securities, Inc. (member FINRA/SIPC), a licensed U.S. broker-dealer.
 GAIN Capital is headquartered in Bedminster, New Jersey, with a global presence across North America, Europe and the Asia Pacific regions.  For further company information, visit
TAGS: gain capital  gain capital forex  convertible notes  corporate funding  corporate debt  gain capital m&a  acquisitions  forex broker  forex broker us  debt instruments  obligations  bonds 

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