Getco plans $470 million loan, $550 million notes for Knight merger

By Sara Rosenberg

New York, Dec. 21 - Getco Holding Co. LLC has received a commitment for a $470 million first-lien senior secured credit facility and expects to issue $550 million of second-lien notes in connection with its merger with Knight Capital Group Inc., according to an SC 13D filed with the Securities and Exchange Commission on Friday.

Jefferies Finance LLC is leading the deal.

The credit facility consists of a $20 million four-year revolver and a $450 million 41/2-year term loan, with both tranches expected to be priced at Libor plus 550 basis points with a 1.25% Libor floor.

The revolver has a 50 bps unused fee.

The term loan has 101 soft call protection for one year.

Amortization on the term loan is up to 15% per year.

Covenants include a maximum consolidated first-lien leverage ratio of 1.75 times, a minimum consolidated interest coverage ratio, a minimum consolidated tangible net worth of $1 billion, a maximum consolidated tangible asset ratio of 6 times and an unrestricted cash and cash equivalents requirement.

Meanwhile, backing the notes offering is a commitment for a $550 million one-year senior secured second-lien bridge loan that is priced at Libor plus 850 bps with a 1.5% Libor floor. The rate will increase by 75 bps after 90 days, and by another 75 bps every 90 days thereafter until it hits a cap.

Under the agreement, Knight shareholders will have the right to elect to receive $3.75 per share in cash or one share of common stock of the new holding company. The cash consideration will be subject to pro-ration if the holders elect to receive more than $720 million in cash in the aggregate.

Along with the transaction, General Atlantic will make an additional $55 million equity investment, which will bring their total investment in the new company to over $400 million.

Getco members will receive 233 million shares of the new holding company and the 57 million shares of Knight currently owned by Getco will be retired.

Closing is expected in the second quarter of 2013, subject to shareholder and customary regulatory approvals.

Getco is a Chicago-based buyer and seller of securities. Knight Capital is a Jersey City, N.J.-based financial services firm.

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