BREAKING NEWS FROM CNBC'S DAVID FABER: KNIGHT CAPITAL REACHES $400 MILLION DEAL TO SAVE FIRM. GIVES INVESTORS RIGHT TO BUY SHARES AT $1.50
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.
With CNBC in the U.S., CNBC in Asia Pacific, CNBC in Europe, Middle East and Africa, CNBC World and CNBC HD+, CNBC is the recognized world leader in business news providing real-time financial market coverage and business information to more than 395 million homes worldwide, including more than 100 million households in the United States and Canada. CNBC also provides daily business updates to 400 million households across China. The network's 16 live hours a day of business programming in North America (weekdays from 4:00 a.m. - 8:00 p.m. ET) is produced at CNBC's global headquarters in Englewood Cliffs, N.J., and includes reports from CNBC News bureaus worldwide. CNBC.com and CNBC Mobile Web (mobile.cnbc.com) offer real-time stock quotes, charts, analysis and video.
Members of the media can receive more information about CNBC and its programming on the NBC Universal Media Village Web site at http://www.nbcumv.com/mediavillage/networks/cnbc/