KCG Americas enters into $355 million revolver credit facility

By Marisa Wong

Madison, Wis., June 9 – KCG Americas, LLC, a wholly owned broker-dealer subsidiary of KCG Holdings, Inc., entered into a credit agreement on June 5 for a $355 million revolving credit facility, according to an 8-K filing with the Securities and Exchange Commission.

BMO Capital Markets and Merrill Lynch, Pierce, Fenner & Smith Inc. are the joint lead arrangers and joint bookrunners with BMO Harris Bank NA as administrative agent and Bank of America, NA as syndication agent.

The credit agreement replaces the company’s credit agreement dated July 1, 2013, which was scheduled to terminate on June 6, 2015. The prior facility size was $500 million with an uncommitted incremental revolver of up to $250 million.

The new facility provides for two classes of revolving loans, together with a swingline facility with a $50 million sublimit, subject to two borrowing bases.

The revolving A loans are available to finance the purchase and settlement of securities. The revolving B loans are available to fund clearing fund deposits with the National Securities Clearing Corp.

The credit facility also provides for an uncommitted incremental revolver of up to $145 million.

Borrowings will bear interest at Libor plus an applicable margin. The margin is 150 basis points for the revolving A loan and 250 bps for the revolving B loan.

Depending on the applicable borrowing base, availability under the facility is limited to either (a) a percentage of the market value of eligible securities pledged as collateral in the case of revolving A loans or (b) the lesser of $115 million and a percentage of the excess over the clearing deposit required by the National Securities Clearing Corp. in the case of revolving B loans.

Loans will mature on June 5, 2017.

The facility is subject to mandatory prepayments (a) in the case of revolving A loans if the amount of revolving A loans exceeds the applicable borrowing base, (b) in the case of revolving B loans, on the earlier of the return of the applicable National Securities Clearing Corp. margin deposits funded from the proceeds of the revolving B loans and five days after the date those revolving B loans were made and (c) in the case of revolving B loans, if revolving B loans have been outstanding for more than 30 days in any 90-day period. Optional prepayments under the facility are permitted at any time, without premium or penalty.

The agreement contains financial maintenance covenants establishing a minimum total regulatory capital, a maximum total assets to total regulatory capital ratio, a minimum excess net capital limit and a minimum liquidity ratio for KCG Americas and a minimum tangible net worth threshold for the parent company.

KCG is a Jersey City, N.J.-based financial services firm.

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