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BREAKING NEWS FROM CNBC'S KATE KELLY: KNIGHT CLOSE TO DEAL TO RAISE $400 MILLION FROM INVESTORS

WHEN: Sunday, August 5, 2012

WHERE: CNBC.com

Knight Close to Deal to Raise $400 Million From Investors

Posted By:

Kate Kelly

| CNBC Reporter

CNBC.com

| 05 Aug 2012 | 01:45 PM ET

Scrambling to raise cash in the wake of a trading snafu that cost it dearly, Knight Capital Group at midday on Sunday appeared to have generated about $400 million from a group of about a half-dozen investors, said a person involved with the deal.

The Chicago market maker Getco and the Omaha brokerage firm TD Ameritrade appear likely to be part of the investment group, this person said, along with another several parties whose names could not yet be determined. A Knight spokeswoman could not immediately be reached for comment.

The anticipated capital infusion would come in the form of a sale of convertible securities, or bonds that turn in to stock in Knight at a certain, fixed, price, this person said. The exact terms of the convertible sale could not immediately be determined, but the conversion price would likely be at a discount to Knight’s closing price on Friday of $4.05 per share, this person said.

Knight officials and their bankers had been working since late in the week to raise emergency capital after a software glitch created $440 million in losses from erroneous stock deals Wednesday morning.

Late Wednesday, Goldman Sachs agreed to purchase the unwanted stock positions from Knight as part of a big basket, people familiar with the matter have said, at a discount for their original purchase price.

—By CNBC’s Kate Kelly, with reporting by John Melloy

© 2012 CNBC.com

URL: http://www.cnbc.com/id/48516238/

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