Shares of FXCM are plunging in premarket trading Tuesday as the online foreign exchange trading broker disclosed that its bailout loan from Leucadia National Corp. includes a rising rate for each month that the loan remains open.
FXCM said that it reached a deal with Leucadia that allowed it to meet its regulatory capital requirements and to continue normal operations after it incurred significant losses from the Swiss National Bank's decision to scrap the minimum exchange rate policy against the euro.
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FXCM Inc. said that it has a credit agreement with Leucadia for a $300 million, two-year term loan. The loan's initial interest rate is 10 percent a year, increasing by 1.5 percent each quarter for as long as the loan is outstanding. The interest rate will not exceed 17 percent a year.
FXCM also has to pay a deferred financing fee of $10 million and may have to pay an additional fee of up to $30 million if certain conditions aren't met.
FXCM's stock tumbled $10.77,or 85.3 percent, to $1.86 before the market open.