INTL FCStone to offer $350m of Senior Secured Notes to fund GAIN Capital deal

INTL FCStone Inc (NASDAQ:INTL) today unveiled its plans to offer $350 million in aggregate principal amount of Senior Secured Notes due 2025. The Notes and the related Note guarantees will be offered in a private offering to qualified institutional buyers and to certain persons outside the United States.

INTL FCStone intends to use the net proceeds from the sale of the notes, together with cash on hand, to (1) fund the cash consideration for the merger of the company’s wholly-owned subsidiary and GAIN Capital Holdings, Inc., with GAIN surviving as the company’s wholly-owned subsidiary, (2) fund the repayment of GAIN’s 5.00% Convertible Senior Notes due 2022 and (3) pay certain related transaction fees and expenses.

The company intends to deposit the gross proceeds of the offering into a segregated escrow account until the date that certain escrow release conditions are satisfied. Among other things, the escrow conditions include the consummation of the merger. The Notes are expected to pay interest semi-annually, in arrears.

Under the terms of the agreement, INTL FCStone will acquire GAIN in an all-cash transaction. GAIN’s stockholders will receive $6.00 per share, representing approximately $236 million in equity value.

In the meantime, the deal has seen opposition among GAIN’s top ranks. On May 14, 2020, Peter Quick and Chris Sugden, two members of GAIN’s board of directors, informed the GAIN board that they no longer supported the merger. Mr Quick and Mr Sugden believe that, in light of the performance of GAIN following the signing of the Merger Agreement, the merger consideration of $6.00 per share in cash, without interest, no longer reflects the long term value of GAIN.

Messrs. Quick and Sugden joined Alex Goor in voting against recommending that the stockholders adopt the Merger Agreement.