FXCM Inc. (NYSE:FXCM), the leading US forex broker, still owes Leucadia National Corporation (NYSE: LUK) $192.7 million outstanding under the credit agreement from January 2015.
According to the report for Q1 ending on March 31, 2016 Leucadia filed with the US Securities and Exchange Commission (SEC), in this period FXCM has repaid $7.7 million of principal, interest and fees.
At the same time Leucadia has reduced $53.2 million from the fair value of their investment in FXCM and the cumulative gains remained at $438 million.
Back in January 2015, Leucaida provided FXCM a $300 million senior secured term loan due January 2017, with rights to a variable proportion of certain distributions in connection with an FXCM sale of assets or certain other events, and to require a sale of FXCM beginning in January 2018.
The sum was needed for the US headquartered broker to meet its regulatory-capital requirements and continue normal operations after the unprecedented loss of $225 million due to Swiss National Bank decision to abandon EUR/CHF minimum exchange rate.
The loan had an initial interest rate of 10% per annum, increasing by 1.5% per annum each quarter, not to exceed 20.5% per annum. In March this year FXCM and Leucadia extended the existing agreement by one year, till January 2018, and amended the bonus system for the broker’s senior management. The initial interest rates were also somewhat reduced – increasing by 1.5 percentage points each quarter, but not exceeding 17% per annum. FXCM expressed confidence it will be able to repay the loan as early as 2016.
The main goal of the extended agreement was to achieve higher value for FXCM’s assets, but did not sit very well with its shareholders and the broker’s stock price fell 22.5% on the day the news was announced.
In April FXCM informed the SEC that it is lowering the senior management bonus targets, thus raising the potential bonuses themselves. Also in April the broker reported that its Q1 2016 retail customer trading volume fell 3% on a quarterly basis.