GAIN Capital announces modified Dutch auction tender offer to purchase up to $50m of its common stock

Maria Nikolova

The offer is scheduled to expire on November 6, 2018, unless it is extended.

Online trading major GAIN Capital Holdings, Inc (NYSE:GCAP) announced today that it commenced a “modified Dutch auction” tender offer to purchase up to $50 million of shares of its common stock, or such lesser number of shares of its common stock as are properly tendered and not properly withdrawn.

The offer sets a price of not less than $7.24 nor greater than $7.94 per share of common stock, to the seller in cash, less any applicable withholding taxes and without interest. The offer is made upon the terms and subject to the conditions described in the offer to purchase and in the related letter of transmittal. The closing price of GAIN’s common stock on the New York Stock Exchange on October 8, 2018, the last full trading day before the commencement of the Offer, was $6.91 per share. The offer is scheduled to expire at 5:00 P.M., New York City time, on November 6, 2018, unless the offer is extended.

“The Offer underlines our ongoing commitment to executing a balanced capital allocation strategy to enhance shareholder value,” stated Glenn Stevens, Chief Executive Officer of GAIN Capital.

“Given our strong capital position, particularly in light of the $85 million in proceeds generated from the sale of the GTX business, as well as the current market price of our common stock, we believe the Offer is a prudent means to return capital to shareholders. Our strong capital position also allows us to make appropriate investments to pursue growth initiatives, consistent with our goal of delivering long-term value.”

GAIN believes that the modified Dutch auction tender offer represents an efficient mechanism to provide GAIN’s stockholders with the opportunity to tender all or a portion of their Shares and thereby receive a return of some or all of their investment in GAIN if they so elect. According to the broker, the offer provides stockholders with an opportunity to obtain liquidity with respect to all or a portion of their shares without the potential disruption to the share price.

Let’s recall that in August 2017, GAIN unveiled its plans to offer $80 million aggregate principal amount of its convertible senior notes due 2022 in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. GAIN Capital also expects to grant the initial purchasers of the notes a 30-day option to purchase up to an additional $12 million aggregate principal amount of the notes solely to cover over-allotments, if any.

GAIN said back then it intended to use a portion of the net proceeds of the offering to repay outstanding indebtedness and the balance for general corporate purposes, which may include strategic acquisitions and share repurchases.

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