Global Brokerage, Inc., the securities firm formerly known as FXCM Group, has entered into a restructuring support agreement and expects to be delisted from Nasdaq Global Market, transferring to Nasdaq Capital Market and certain changes to its board of directors and officers, the company announced in a press release. The company has been defending itself from a class-action lawsuit on behalf of investors in the public securities of FXCM Inc. The action is brought on behalf of a putative class consisting of all persons and entities who purchased or otherwise acquired publicly traded FXCM securities from March 15, 2012 to February 6, 2017.
Recently, Global Brokerage and its affiliate, Global Brokerage Holdings, LLC, have been engaged in a series of highly productive negotiations with an ad hoc group of holders of more than 68.5% of Global Brokerage's 2.25% Convertible Notes due 2018. These negotiations, aimed at restructuring the terms of the Current Notes, have also included participation from FXCM Group, LLC and Leucadia National Corporation and LUK-FX Holdings, LLC.
As a result of those negotiations, Global Brokerage, Global Brokerage Holdings, FXCM Group, Leucadia and the Ad Hoc Group have entered into a restructuring support agreement to restructure the obligations of Global Brokerage and Global Brokerage Holdings pursuant to a prepackaged plan of reorganization to be filed under Chapter 11 of the United States Bankruptcy Code. The overall purpose of the Plan is to enable Global Brokerage to extend the maturity on its current debt obligations for five years and restructure its current operations to reduce current expenses.
FXCM Group is not involved with the Chapter 11 filing. FXCM's customers and customer funds will not be impacted by the RSA and the Plan. Similarly, FXCM's banking and trading counterparties, service providers, and other business relationships will not be impacted. FXCM Group, a leading retail FX and CFD broker will continue to operate normally.
Generally, the Plan provides that:
Current Notes will be exchanged for an equal amount of a new series of senior secured notes due five years from Global Brokerage's emergence from Chapter 11 protection. The New Secured Notes will be guaranteed by Global Brokerage Holdings and accrue cash interest at a rate of 7% with a payment in kind toggle option. The indenture governing the New Secured Notes will not include a convertible feature, but will include certain covenants, including covenants which, subject to certain exceptions, limit the ability of Global Brokerage and Global Brokerage Holdings to incur additional indebtedness, engage in certain asset sales, make certain types of restricted payments, engage in transactions with affiliates and create liens on assets. The New Secured Notes are not liabilities of FXCM Group and only have recourse to the assets of Global Brokerage and Global Brokerage Holdings.
The credit agreement among Global Brokerage Holdings and FXCM Group, as borrowers, and Leucadia, as lender, will be amended to provide a twelve-month extension.
The rights of holders of Global Brokerage common stock will be unimpaired. The operating agreements of Global Brokerage Holdings and FXCM Group will be amended to provide certain covenants that will, among other things, permit certain excess cash generated by FXCM Group and its affiliates to be distributed to Global Brokerage Holdings and, thus, Global Brokerage. The 2016 Incentive Bonus Plan for Founders and Executives, which had provided a long-term incentive program for the founders of Global Brokerage, was terminated on November 8, 2017.