August 6, 2012 – Knight Capital Group was to receive $400 million in fresh capital from investors, as it attempted to put together a rescue deal in order to stave off bankruptcy following the huge loss of $440 million last week.
The investors in the group included General Atlantic and Blackstone Group, which are equity firms, along with Stifel Nicolas and TD Ameritrade. The injection of capital will be made through preferred stock that is convertible, which would have a price of conversion of $1.50 a share and a coupon of 2%. The four investors would have 70% ownership of Knight after the conversion, which was expected to happen in 10 business days.
Early Monday, a formal announcement of the deal and its details is expected to be released. Knight must assure all of its customers that the company is still viable before the markets open for the week.
Knight also has been trying to put together a restructuring deal that would help the company continue operations and avoid further uncertainty and disruption.
On Friday, shares of stock in Knight closed at $4.05, up 57%, but far below the $10.33 the stock closed at on Tuesday, one day prior to the huge trading debacle.
The problems at Knight started early Wednesday when a glitch in its software flooded the NYSE with orders that were unintended for a number of stocks. That boosted some shares more than 100% and left the company with a trading loss of $440 million.