Retail FX brokerage group Gain Capital Holdings Inc (NYSE:GCAP) has announced the preliminary results of its “modified Dutch auction” tender offer, which expired at 5:00 P.M., New York City time, on November 6, 2018.
GAIN Capital, which operates the FOREX.com and City Index retail forex brokerage brands, announced its intention to buy back up to $50 million of its own shares in early October via a modified Dutch auction.
A Dutch auction is a public offering auction structure in which the price of the offering is pre-set, presumably after taking in all bids to determine the highest price at which the total offering can be sold. In this type of auction, investors place a bid for the amount they are willing to buy in terms of quantity and price. In this case, GAIN stated that it would pay anywhere between $7.24 and $7.94 per share tendered.
GAIN stated that based on the preliminary count by Broadridge Corporate Issuer Solutions, Inc., the depositary for the tender offer, a number of shares of GAIN’s common stock more than sufficient to allow GAIN to successfully complete the purchase of $50 million of its common stock were properly tendered and not properly withdrawn at or below the purchase price of $7.94 per share, including shares that were tendered by notice of guaranteed delivery.
In accordance with the terms and conditions of the tender offer and based on the preliminary count by the depositary, GAIN expects to accept for payment, at a purchase price of $7.84, approximately 6,377,551 shares (based on proration of shares tendered) of its common stock properly tendered at or below the purchase price and not properly withdrawn before the expiration date, at an aggregate cost of approximately $50 million, excluding fees and expenses relating to the tender offer.
The number of shares to be purchased and the purchase price are preliminary and subject to change. The preliminary information contained in this press release is subject to confirmation by the depositary and is based on the assumption that all shares tendered through notice of guaranteed delivery will be delivered within the two trading day settlement period. The final number of shares to be purchased and the final purchase price will be announced following the expiration of the guaranteed delivery period and completion by the depositary of the confirmation process. Payment for the shares accepted for purchase under the tender offer, and return of all other shares tendered and not purchased, will occur promptly thereafter.
Jefferies LLC acted as dealer manager for the tender offer.
GAIN Capital also announced today that its Board of Directors has increased the total amount of cash available for purchases of GAIN’s common stock under its previously announced share repurchase plan to $50 million in order to increase its flexibility to opportunistically purchase shares of common stock in the open market.