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Knight Capital (KCG) confirms (8-K) a group of investors have agreed to provide it financing to...

Knight Capital (KCG) confirms (8-K) a group of investors have agreed to provide it financing to the tune of $400M 2% preferreds convertible into 267M shares (98.2M currently outstanding), meaning a conversion price of $1.50. Shares -38% premarket to $2.52. (earlier)
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Comments (3)
  • Mark Griffith
    , contributor
    Comments (4) | Send Message
     
    Let's see if I got this right? A week ago the book value was $14 per share. The $440 million was worth about $4 as a haircut. That left $10 per share as for book, mostly long term investments. Now on a distress sale, $10 should be worth $5 right?

     

    This morning management sells 70% of company for $1.50. Hum...

     

    Yes I know that book value is not a good measure, but for a broker-dealer a lot of it is in clearing deposits. Oh well... happily I didn't buy that one last Thursday.
    6 Aug 2012, 01:23 PM Reply Like
  • PalmDesertRat
    , contributor
    Comments (2940) | Send Message
     
    I had the same reaction. In the latest 10-Q KCG had $1.5 billion of equity. A loss of $400mill is 27%. so why is it necessary for a new $400 million to dilute equity by 70%. there must be some other problems in their business which the public hasn't seen but the new investors saw over the weekend.
    6 Aug 2012, 07:17 PM Reply Like
  • andres17
    , contributor
    Comments (108) | Send Message
     
    Well, the new investors have the leverage to drive a hard negotiation. Don't like it, then look for someone else. So that might be the reason they got such a nice deal.
    6 Aug 2012, 07:33 PM Reply Like
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