WHEN: Sunday, August 5, 2012
DAVID FABER: Knight Capital has been saved with an infusion of $400 million in the form of a convertible preferred security that gives the buyers the right to buy Knight shares at $1.50, according to sources close to the deal. The private equity firm of General Atlantic (which owns the Getco market maker) along with Blackstone private equity, Ameritrade and Stifel Nicolas will buy the $400 million preferred, which has a conversion price of $1.50 and will massively dilute the trading firm, but allow it to replenish its coffers and open for business on Monday. Knight shares closed at $4.05 on Friday.
The four buyers of the preferred will together own about 70 percent of the firm, which upon conversion of the preferred, will see its share count rise from a hundred million shares to roughly 350 million shares. The coupon on the preferred is two percent, but all the firms are expected to convert after ten business days.
Jefferies led the offering and has been engaged with Knight since it suffered a $440m trading loss on Wednesday.
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