I think the biggest problem is that LUK's new structure/composition just doesn't fit into most of the fund's preference to buy individual stocks & sectors. The JEF component probably taints them from other investment banks. Corp rules to preserve the NOLs keep most from wanting a piece...at $14 and change take $1 Billion, retire 60M shares and boost BV by $5/share. The sum of the pieces is worth way more than the whole right now. Investing in out of favor sectors is a game of patience, but right now deep value starts at home.
Good news. I hope Handler retired 6 million shares yesterday. Deep value bargains & charity start at home.
And in 3 months the SEC filing will say they are trying for Q3 to complete the sales so they can pay Leucadia the $200m plus...
I don't see LUK restructuring. Look at LUK's stock price last 2 years...they are looking for profit. They will hold FXCM to the agreed terms (dollar wise). Note, the Jan 2016 interest rate is 16%...something soon must happen...this was designed to be a short-term loan...if not repaid shortly, all is lost to LUK. I'd say buy some LUK at $15.90 instead.
...and what if they didn't buy any? Might be a lot of talk & fluff....don't know. This board was loaded with shorts 6 mo ago, today all pumpers....the answer is probably in the middle.
Looking at the loan terms I'd say they pretty much own it already. The Jan loan rate will be 16%, much left to pay on it. The FXCM shares are fun to play right now, but it's a party that probably won't end well.
About $170M remains on the loan, which will carry a 16% rate in January. They first have to pay the loan back, then on top of that, LUK can force a sale, and get a 50/50 split of the first $500m proceeds, then a 90% split above that. If you read the loan terms, they very much favor LUK, and LUK doesn't change terms (sorry). I think there exists about $210M in total shareholder equity/value if all goes well. We are at $107M now, but there is still significant risk...mainly, they still have to pay $170M out of what? A buyback only expedites the eventual takeover by LUK (the heavy lifting is done). $20 for now seems fair.
In January, the note's interest rate moves to 16%. Clearly something will happen soon. Buyout, buyback, equity...something.
I agree with the $150M, knowing LUK, there will be no major changes in the deal. They will make a lot of money, FXCM will survive, management keeps their jobs. Max FXCM shareholder value is $300m, LUK gets the other $600M....that's how it goes. It will go to $25 soon, from there who knows.
$15-$22 in the near future is possible ($1.50-$2.20 pre-split). Only 5M shares, low price, could be very elastic indeed!