Purchasers exercise full over-allotment option for GAIN Capital’s convertible notes due 2022

Maria Nikolova

The full exercise of the option takes the aggregate principal amount of the notes sold in the offering to $92 million.

Continuing the topic of the private offering of 5.00% Convertible Senior Notes due 2022 by Gain Capital Holdings Inc (NYSE:GCAP), the company posted a brief announcement today, stating that the initial purchasers have exercised in full their option to purchase an additional $12 million in aggregate principal amount of the notes. The full exercise of the option means that the aggregate principal amount of the notes sold in the offering is now at $92 million.

The offering is poised to close today, August 22, 2017, subject to customary closing conditions.

GAIN Capital expects the net proceeds from the offering of notes, including the notes sold pursuant to the initial purchasers’ option to purchase additional notes, to be around $89 million, after deducting discounts to the initial purchasers but ahead of taking into account any estimated offering expenses payable by GAIN Capital.

A point of interest is, of course, how GAIN will spend the proceeds of the offering. In its initial press release  on the offering on August 16th, the broker said that it plans “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”.

This statement is in line with the ambitions voiced by GAIN when it announced its results for the second quarter of 2017, stressing again its intentions to continue expansion via mergers and acquisitions. Glenn Stevens, GAIN’s CEO, stated back then that “Strategic M&A remains the cornerstone of our going forward plan.”

“Via this method, we can generate diversity of revenue streams, and are well positioned to invest in organic growth. This will be via growing our share in our existing markets which spans across 8 countries, and gives us an opportunity to build on our existing global reach”, he added.

Back then, Mr Stevens did not specify any particular M&A targets. And yet, as one might expect, he hailed the benefits of the deal with FXCM from earlier this year, which saw GAIN transfer FXCM’s US retail FX customers to Forex.com. GAIN paid based on the activity of transferred customers. At the moment of publication of GAIN’s earnings report for the second quarter, the company has paid $6.5 million for FXCM’s accounts.

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