JERSEY CITY, N.J., March 16 /PRNewswire-FirstCall/ -- Knight
Capital Group, Inc. (Nasdaq: NITE) today announced the pricing
of its private offering of $325
million aggregate principal amount of 3.50% Cash Convertible
Senior Subordinated Notes due 2015. In addition, Knight has granted
the initial purchasers of the notes an option to purchase up to an
additional $50 million aggregate
principal amount of notes, solely to cover over-allotments, if any.
The notes are being sold in a private placement only to qualified
institutional buyers pursuant to Rule 144A under the Securities Act
of 1933, as amended (the "Securities Act"). Knight expects
to close the notes offering on or about March 19, 2010, subject to the satisfaction of
various customary closing conditions.
The notes will pay interest semi-annually on March 15 and September
15 of each year, beginning September
15, 2010, at a rate of 3.50% per annum, and will mature on
March 15, 2015. Prior to December 15, 2014, the notes will be convertible
into cash only upon specified events and, thereafter, at any time,
based on an initial conversion rate of 47.9185 shares of Knight
common stock per $1,000 principal
amount of notes, which is equivalent to an initial conversion price
of approximately $20.87 or a
conversion premium of approximately 32.5% over the closing sale
price of $15.75 per share of Knight
common stock on the NASDAQ Global Select Market on March 15, 2010. The conversion rate and
conversion price will be subject to adjustment in certain events,
such as distributions of dividends or stock splits. Upon cash
conversion, Knight will deliver an amount of cash calculated over
the applicable observation period. Knight will not deliver its
common stock (or any other securities) upon conversion under any
circumstances.
In connection with the pricing of the notes, Knight has entered
into privately negotiated cash convertible note hedge transactions
with one or more affiliates of the initial purchasers of the notes
or other financial institutions (the "option counterparties") that
are expected generally to reduce Knight's exposure to potential
cash payments in excess of the principal amount of the notes that
may be required to be made by Knight upon the cash conversion of
the notes. Knight has also entered into privately negotiated
warrant transactions with the option counterparties, which could
have a dilutive effect to the extent that the price of Knight
common stock exceeds the applicable strike price of the warrants,
which is $31.50 and represents a
premium of approximately 100% over the closing price of Knight
common stock on March 15, 2010.
However, subject to certain conditions, Knight may elect to settle
the warrants in cash. If the initial purchasers exercise
their over-allotment option, Knight may enter into additional cash
convertible note hedge transactions and additional warrant
transactions.
In connection with establishing their initial hedge of the cash
convertible note hedge and warrant transactions, the option
counterparties or their affiliates expect to enter into various
derivative transactions with respect to Knight common stock
concurrently with or shortly after the pricing of the notes. This
activity could increase (or reduce the size of any decrease in) the
market price of Knight common stock at that time. In addition, the
option counterparties or their affiliates may modify their hedge
positions by entering into or unwinding various derivatives with
respect to Knight common stock and/or purchasing or selling Knight
common stock in secondary market transactions following the pricing
of the notes and prior to the maturity of the notes (and are likely
to do so during any observation period related to a conversion of
notes). This activity could also cause or avoid an increase or a
decrease in the market price of Knight common stock.
Knight intends to use the net proceeds to pay the costs of the
cash convertible note hedge transactions described above (after
such costs are offset by the proceeds to Knight from the warrant
transactions described above) and to retire debt of $140 million in a senior secured term loan
facility and senior secured revolving facility. The remainder of
the net proceeds will be used for general corporate purposes.
This press release does not constitute an offer to sell, or the
solicitation of an offer to buy, any securities. The notes have not
been, and will not be, registered under the Securities Act or the
securities laws of any other jurisdiction and may not be offered or
sold in the United States absent
registration or an applicable exemption from registration
requirements. The notes are being offered only to qualified
institutional buyers pursuant to Rule 144A under the Securities
Act.
About Knight
Knight Capital Group, Inc. (Nasdaq: NITE) is a global financial
services firm that provides market access and trade execution
services across multiple asset classes to buy- and sell-side firms.
Knight's hybrid market model features complementary electronic and
voice trade execution services in global equities and fixed income
as well as foreign exchange, futures and options. The firm is
consistently ranked as the leading source of off-exchange liquidity
in U.S. equities. Knight also provides capital markets services to
corporate issuers. Knight is headquartered in Jersey City, NJ with a growing global presence
across North America, Europe and the Asia-Pacific region. For more information,
please go to www.knight.com.
Certain statements contained herein may constitute
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements are not historical facts and are based on current
expectations, estimates and projections about the Company's
industry, management's beliefs and certain assumptions made by
management, many of which, by their nature, are inherently
uncertain and beyond our control. Accordingly, readers are
cautioned that any such forward-looking statements are not
guarantees of future performance and are subject to certain risks,
uncertainties and assumptions that are difficult to predict
including, without limitation, risks associated with changes in
market structure, legislative or regulatory rule changes, the
costs, integration, performance and operation of businesses
recently acquired or developed organically, or that may be acquired
in the future, by the Company and risks related to the costs and
expenses associated with the Company's exit from the Asset
Management business. Since such statements involve risks and
uncertainties, the actual results and performance of the Company
may turn out to be materially different from the results expressed
or implied by such forward-looking statements. Given these
uncertainties, readers are cautioned not to place undue reliance on
such forward-looking statements. Unless otherwise required by law,
the Company also disclaims any obligation to update its view of any
such risks or uncertainties or to announce publicly the result of
any revisions to the forward-looking statements made herein.
Readers should carefully review the risks and uncertainties
disclosed in the Company's reports with the U.S. Securities and
Exchange Commission (SEC), including, without limitation, those
detailed under the headings "Certain Factors Affecting Results of
Operations" and "Risk Factors" in the Company's Annual Report on
Form 10-K for the year-ended December 31,
2009, and in other reports or documents the Company files
with, or furnishes to, the SEC from time to time. This information
should also be read in conjunction with the Company's Consolidated
Financial Statements and the Notes thereto contained in the
Company's Annual Report on Form 10-K for the year-ended
December 31, 2009, and in other
reports or documents the Company files with, or furnishes to, the
SEC from time to time.
SOURCE Knight Capital Group, Inc.