A teetering Knight Capital Group announced a $400 million deal on Monday with a group of investors that keeps the company in business, but comes at a huge cost to investors.
The firms will buy 2 percent convertible preferred stock to save Knight, which was brought to its knees last week by a software glitch that caused errant trading in dozens of stocks.
The deal is expected to close later Monday morning and came to light after Knight weighed a variety of offers.
"We made the right choice for this firm," Knight CEO Thomas Joyce told CNBC. "We had tons of inquiries across a wide spectrum of ideas. I'm very confident that we settled on the best solution for our company."
Joyce said the total offers "was a big number" that was "in the neighborhood" or 90 inquiries.
"The flattering thing is how the industry responded to us," he said during a live interview. "The wildly flattering thing was how our clients responded to us...when we were under stress last week."
The preferred shares are convertible into about 267 million shares of common stock, Knight said in a U.S. Securities and Exchange Commission filing, implying the investors would get a stake of a little more than 70 percent in Knight.Page 1 of 5 | Next Page