KCG Issues New Notes for $500 Million to Repay Existing Obligations

KCG Holdings Inc. (NYSE: KCG) announced that yesterday, March 10, 2015, it priced a private offering of $500 million principal amount of 6.875% senior secured notes due 2020.

KCG says it intends to use the net proceeds from the offering to repay the company's maturing convertible notes, redeem KCG's existing senior secured notes, as well as for general corporate purposes, which may include share and warrant repurchases.

In March 2010, Knight Capital Group (as the firm was known before GETCO and Knight merged and rebranded as KCG) issued $375 million aggregate principal amount of cash convertible senior subordinated notes due on March 15, 2015 in a private offering. These convertible notes bear interest at a rate of 3.50% per year. The convertible notes are reported as debt in the company’s consolidated statements of financial condition.

The new notes will be sold only to qualified institutional buyers under the American Securities Act, and outside of the United States to non-US persons pursuant to the Securities Act.

The notes have not been registered under the Securities Act or any state securities laws, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and state securities laws.

In January of this year, the company also sold its KCG Hotspot unit to BATS Global Markets for $365 million. The deal includes sharing of certain tax benefits between the companies which could save KCG Holdings up to $70 million over a three-year period and marks a continuing diversification effort by BATS.