Investment banking giant Jefferies filed its quarterly report with the SEC last night. The document provides details about the progress of the loan agreement between Leucadia National and FXCM.
Back in 2015, Jefferies bailed out the Forex brokerage company with a $300 million loan. The terms of the agreement between the firms ensured that the creditor would receive sizeable returns on its investment.
As of September 30, we have more details about what those returns are. Until the end of the third quarter of 2018, Jefferies received $347 million of principal, interest, and fees from its initial $279 million investment in FXCM.
Under the terms of the credit agreement, the loan was due by January 2017. The term was subsequently extended until January 2019. With an initial interest rate of 10 percent per annum, which has been increasing by 1.5 percent per annum each quarter, the current rate on the loan reached the cap in the agreement at 20.5 percent per annum.
FXCM’s $15.4 Million Repayment in 2018
Throughout the first nine months of this year, FXCM repaid Jefferies $15.4 million of principal and interest. The remaining amount which the brokerage owes to its creditor is $70.6 million.
Jefferies recorded gains related to the term loan of $1.3 million and $16.4 million during the three and nine months that ended on September 30, 2018.
The speed of the loan repayment has been somewhat slower when compared to 2017. At the time the creditor posted revenues of $2.3 million and $17.6 million during the three and nine months ended September 30, 2017.
After the latest amendments to the loan agreement from November last year, Jefferies holds a 50 percent voting interest in FXCM. The company is also entitled to up to 75 percent of all distributions.
Earlier this year, FXCM committed to a new brand identity. The brokerage became "a Leucadia company" and Jefferies is accounting its investment as one into an associated company.
Jeffries and FXCM are taking advantage of their close ties and have identified operating synergies. Back in April, the companies announced the expansion of their prime brokerage relationship.
