Refco May Pay Forex $4.15 Mln in Fees as Part of Sale Deal
Nov. 20 (Bloomberg) -- Refco Inc., the bankrupt futures broker, agreed to pay Forex Capital Markets LLC at least $4.15 million should it sell its unregulated currency-trading accounts to another buyer.
Forex agreed on Nov. 9 to acquire Refco FX Associates LLC, a broker in the $1.9 trillion-a-day global currency-trading market, for about $110 million. Refco is seeking court permission to auction the assets in December to try and get a better deal, as is typical in bankruptcy sales. Forex can raise its bid at the auction.
Should Refco sell the assets to another buyer, Forex is asking to be paid a $3.15 million break-up fee and $1 million expense reimbursement. Refco would also repay Forex any amounts it owes the company under a previous contract. That amount was $8.4 million as of Oct. 17, according to papers filed with the U.S. Bankruptcy Court in New York.
Forex ``has expended considerable time, money, and energy pursuing the agreement,'' Refco lawyer Sally McDonald Henry said in court papers. ``The buyer is unwilling to execute the purchase agreement and to commit to hold open its offer unless the payments of the expense reimbursement and break-up fee are authorized.''
$6.15 Million Higher
Refco later this month will seek court approval to conduct the auction. Either Forex or Refco can scrap the sale agreement if the auction doesn't occur within 20 days, according to the court documents.
Refco proposes minimum bids at the auction be least $6.15 million higher than the Forex offer, plus an amount equal to the debt owed to Forex at the time the bid is made. Should the amount owed to Forex remain $8.4 million, a minimum starting bid at the auction would need to be $124.55 million, or $14.55 million higher than Forex's offer.
To participate in the auction, prospective buyers must provide evidence of their ability to close a sale ``on a timely basis,'' according to court papers.
The fees and auction procedures require court approval.
On Oct. 24, J.C. Flowers & Co. dropped its offer to buy Refco's regulated brokers unit after a judge wouldn't approve a roughly $24 million break up fee. Man Group Plc eventually purchased the unit in a deal valued at $323 million after a 21- hour auction.
Refco owes creditors about $16.8 billion after filing the 14th largest bankruptcy in U.S. history on Oct. 17. It will have about $1.25 billion in cash after selling its main futures unit to Man Group Plc.
The bankruptcy case is In re Refco Inc., 05-60006, U.S. Bankruptcy Court, Southern District of New York.
To contact the reporter on this story:
Tom Becker in U.S. Bankruptcy Court at New York tbecker5@bloomberg.net.
Last Updated: November 20, 2005 10:51 EST
Nov. 20 (Bloomberg) -- Refco Inc., the bankrupt futures broker, agreed to pay Forex Capital Markets LLC at least $4.15 million should it sell its unregulated currency-trading accounts to another buyer.
Forex agreed on Nov. 9 to acquire Refco FX Associates LLC, a broker in the $1.9 trillion-a-day global currency-trading market, for about $110 million. Refco is seeking court permission to auction the assets in December to try and get a better deal, as is typical in bankruptcy sales. Forex can raise its bid at the auction.
Should Refco sell the assets to another buyer, Forex is asking to be paid a $3.15 million break-up fee and $1 million expense reimbursement. Refco would also repay Forex any amounts it owes the company under a previous contract. That amount was $8.4 million as of Oct. 17, according to papers filed with the U.S. Bankruptcy Court in New York.
Forex ``has expended considerable time, money, and energy pursuing the agreement,'' Refco lawyer Sally McDonald Henry said in court papers. ``The buyer is unwilling to execute the purchase agreement and to commit to hold open its offer unless the payments of the expense reimbursement and break-up fee are authorized.''
$6.15 Million Higher
Refco later this month will seek court approval to conduct the auction. Either Forex or Refco can scrap the sale agreement if the auction doesn't occur within 20 days, according to the court documents.
Refco proposes minimum bids at the auction be least $6.15 million higher than the Forex offer, plus an amount equal to the debt owed to Forex at the time the bid is made. Should the amount owed to Forex remain $8.4 million, a minimum starting bid at the auction would need to be $124.55 million, or $14.55 million higher than Forex's offer.
To participate in the auction, prospective buyers must provide evidence of their ability to close a sale ``on a timely basis,'' according to court papers.
The fees and auction procedures require court approval.
On Oct. 24, J.C. Flowers & Co. dropped its offer to buy Refco's regulated brokers unit after a judge wouldn't approve a roughly $24 million break up fee. Man Group Plc eventually purchased the unit in a deal valued at $323 million after a 21- hour auction.
Refco owes creditors about $16.8 billion after filing the 14th largest bankruptcy in U.S. history on Oct. 17. It will have about $1.25 billion in cash after selling its main futures unit to Man Group Plc.
The bankruptcy case is In re Refco Inc., 05-60006, U.S. Bankruptcy Court, Southern District of New York.
To contact the reporter on this story:
Tom Becker in U.S. Bankruptcy Court at New York tbecker5@bloomberg.net.
Last Updated: November 20, 2005 10:51 EST
