Why FXCM Inc (FXCM) Stock Is Plunging Today

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FXCM Inc (NASDAQ:FXCM) stock was tanking on Tuesday following news that the company is leaving its U.S. business.

FXCM Inc, FXCMFXCM Inc says that it will be selling its U.S. business to Gain Capital Holdings Inc (NYSE:GCAP). This agreement is non-binding and it will have GCAP taking control of FXCM’s U.S. customer accounts. The deal will need approval from regulators before it can be completed.

FXCM Inc notes that its U.S. business had $48 million in unaudited net revenues and generated an EBITDA loss in 2016. However, it says that the cost of the business won’t be transferring over to Gain Capital Holdings Inc.

FXCM Inc says that leaving its U.S. business will free up $52 million in capital. The foreign exchange trading company says that it plans to use this capital, as well as proceeds from the sale to Gain Capital Holdings Inc, to pay down debt it owes to Leucadia National Corp. (NYSE:LUK).

FXCM Inc also points out that the exit of its U.S. business will in no way affect its global customers. It also says that it will continue to support its customers in the United States until it finishes its deal with Gain Capital Holdings Inc.

FXCM Inc is leaving its U.S. business due to settlements with the National Futures Association and the Commodity Futures Trading Commission. The company is neither confirming nor denying the charges in these cases. However, the settlements mean that the company is no longer allowed to continue its business in the United States.

FXCM stock was down 50% and GCAP stock was up 5% as of Tuesday afternoon.


Article printed from InvestorPlace Media, https://investorplace.com/2017/02/fxcm-inc/.

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