KCG Holdings readies launch of $555 million credit facility for Monday

By Sara Rosenberg

New York, May 9 - KCG Holdings Inc. is set to hold a bank meeting at 11 a.m. ET on Monday to launch a $555 million credit facility, according to a market source.

Jefferies Finance LLC and Goldman Sachs & Co. are the joint-lead arrangers and bookrunners on the deal.

The facility consists of a $20 million four-year revolver and a $535 million 41/2-year term loan B, the source said.

The term loan includes a mandatory $235 million amortization payment within one year after the closing and $30 million per annum thereafter, the source continued.

Proceeds will be used to help fund the merger of Getco Holding Co. LLC and Knight Capital Group Inc. and to refinance existing debt.

Under the agreement, Knight shareholders will have the right to elect to receive $3.75 per share in cash for each share of Knight class A common stock or one-third of a share of KCG common stock. The cash portion of the consideration for Knight stockholders is subject to pro-ration if the holders of more than 66.7% of the Knight common stock eligible for election in the transaction properly elect to receive the cash consideration for their Knight shares.

Getco unitholders are expected to receive about 76.7 million shares of KCG common stock and 24.4 million warrants to acquire additional common stock.

Pro forma for the transaction, the company will have over $600 million of cash on the balance sheet and $1.2 billion of tangible equity.

Before the amortization payment, gross leverage will be 1.8 times through the first-lien and 2.9 times total, the source added.

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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