Global Brokerage (FXCM Inc) warns of default possibility due to potential NASDAQ delisting in 6 months

Maria Nikolova

The company is engaging with convertible bondholders in order to find a solution.

Earlier this month, it became clear that Global Brokerage Inc (NASDAQ:GLBR), formerly known as FXCM Inc is having hard time remaining listed on NASDAQ. While there is no immediate change to the company’s listed status at this point, unless its market capitalization rises sufficiently to meet NASDAQ listing criteria by the end of October this year, the company faces delisting.

Today, Global Brokerage Inc reiterated the possible heavy consequences from an eventual delisting, as it announced its results for the first quarter of 2017. The Investor Presentation bluntly said that there is a risk of potential delisting in 6 months from NASDAQ Global Select Market that could accelerate debt obligations and this is creating a going concern issue this quarter which looks out 12 months. “This could lead to an event of default”, Global Brokerage warns.

The company is now engaging with convertible bondholders, as it explores refinancing alternatives.

This adds to other warnings featured in FXCM’s annual report for 2016 – in it, the word “default” appears at least a dozen times. Let’s recall that in the report, FXCM said that if Leucadia accelerates the repayment of borrowings, the broker may not have sufficient assets to repay its debt or it would have a material adverse effect on its business, operations, financial condition and liquidity.

“The Convertible Notes mature on June 15, 2018. At that time, we will be obligated to repay the aggregate principal amount of the Convertible Notes. We may not have enough available cash or be able to obtain financing at that time to meet our repayment obligations”, Global Brokerage warned back then.

In addition, certain provisions of the Convertible Notes could discourage an acquisition of the broker by a third party, as they render the broker more expensive to buy. There are also anti-takeover provisions in Delaware law.

FXCM’s Class A common stock traded on the New York Stock Exchange under the symbol “FXCM” until the broker voluntarily delisted from the NYSE on September 23, 2016. Effective September 26, 2016, its Class A common stock began trading on the NASDAQ Global Market of The NASDAQ Stock Market LLC under the symbol “FXCM.” The transfer to the NASDAQ Global Market was dubbed to provide better alignment with FXCM’s business.

On February 24, 2017, FXCM Inc changed its name to Global Brokerage, Inc. Its Class A common stock began trading on the NASDAQ under the symbol “GLBR” effective February 27, 2017.

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