If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans,
please check the following box. ☐
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, please check the following box. ☒
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If
this Form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following
box. ☒
If this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D.
filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box. ☐
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, a smaller reporting company or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting
company and emerging growth company in Rule
12b-2
under the Securities Exchange Act of 1934:
☐ If an emerging growth company, indicate by check mark if the Registrant has elected not to use the
extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
RISK FACTORS
In addition to the other information included in this prospectus, including the matters addressed under Forward-Looking
Statements, you should carefully consider the risk factors that are set forth in our Annual Report on Form
10-K
for the year ended December 31, 2016 and in our Quarterly Reports on Form
10-Q
for the quarters ended March 31, 2017 and June 30, 2017, and any updates to those risk factors or new risk factors contained in our subsequent Annual Reports on Form
10-K,
Quarterly Reports on Form
10-Q
and Current Reports on Form
8-K,
which are incorporated by reference into this prospectus,
and the following risks.
The risks and uncertainties discussed below and in the documents referred to above, as well as other
matters discussed in this prospectus and in those documents, could materially and adversely affect our businesses, financial condition, liquidity, results of operations, and prospects, and the market price of the notes. Moreover, the risks and
uncertainties discussed below and in the foregoing documents are not the only risks and uncertainties that we face, and our businesses, financial condition, liquidity and results of operations and the market price of the notes could be materially
adversely affected by other matters that are not known to us or that we currently do not consider to be material risks.
Risks Related to the
5.125% Senior Notes
The 5.125% senior notes are structurally subordinated to the obligations of our subsidiaries and to all secured
indebtedness, and this may limit our ability to satisfy our obligations under the notes.
The 5.125% senior notes are our senior
unsecured obligations and rank equally with all of our other indebtedness that is not expressly subordinated to the notes. The 5.125% senior notes are structurally subordinated to the obligations of our subsidiaries and to all of our secured
indebtedness to the extent of the value of the collateral securing such indebtedness. As of June 30, 2017, we had outstanding approximately $1.1 billion principal amount of senior indebtedness (exclusive of inter-company debt, trade
payables, distributions payable and accrued expenses), including approximately $287.4 million of indebtedness owed or guaranteed by one or more of our subsidiaries, approximately $42.6 million of which was secured. In addition, as of
June 30, 2017, our subsidiaries had outstanding approximately $2.8 billion of other liabilities (exclusive of the approximately $287.4 million of indebtedness).
We conduct substantially all of our operations through our operating subsidiaries. We do not have any material assets other than our direct
and indirect ownership in the equity of our operating subsidiaries. As a result, our cash flow and our ability to service our debt, including the 5.125% senior notes, are dependent upon the earnings of our subsidiaries. In addition, we are dependent
on the distribution of earnings, loans or other payments by our subsidiaries to us. Certain regulatory requirements and debt and security agreements entered into by our subsidiaries contain various restrictions, including restrictions on payments by
our subsidiaries to us and the transfer by our subsidiaries of assets pledged as collateral. In the event of a bankruptcy, liquidation, dissolution, reorganization or similar proceeding with respect to any of our subsidiaries, we, as an equity owner
of such subsidiary, and therefore holders of our debt, including the notes, will be subject to the prior claims of such subsidiarys creditors, including trade creditors, and any preferred equity holders.
In the event of a bankruptcy, liquidation, dissolution, reorganization or similar proceeding with respect to us, the holders of any secured
indebtedness will be entitled to proceed directly against the collateral that secures such secured indebtedness. Therefore, such collateral will not be available for satisfaction of any amounts owed under our unsecured indebtedness, including the
notes, until such secured indebtedness is satisfied in full.
There are limited covenants and protections in the indenture for the 5.125% senior
notes.
While the indenture governing the 5.125% senior notes contain terms intended to provide protection to holders upon the
occurrence of certain events involving significant corporate transactions, these terms are limited and may not be sufficient to protect an investment in the notes. For example, there are no financial covenants in the indenture. As a result, we are
not restricted under the terms of the notes from entering into transactions that could increase the total amount of our outstanding indebtedness, adversely affect our capital structure or our credit ratings or associated outlooks, or otherwise
adversely affect the holders of the notes.
As described under Description of 5.125% Senior NotesOffer to Repurchase Upon a
Change of Control Triggering Event, upon the occurrence of a Change of Control Triggering Event, holders are entitled to require us to repurchase their 5.125% senior notes at 101% of their principal amount. However, the definition of the term
Change of Control Triggering Event is limited and does not cover a variety of transactions (such as acquisitions by us, recapitalizations or going private transactions by our affiliates) that could negatively affect the value
of the notes. A change of control transaction under the indenture may only occur if there is a change in the controlling interest in us. For a Change of Control Triggering Event to occur there must be not only a change
3
of control transaction as defined in the indenture governing the notes, but also a ratings downgrade resulting from such transaction. If we were to enter into a significant corporate transaction
that negatively affects the value of the notes, but would not constitute a Change of Control Triggering Event, holders would not have any rights to require us to repurchase the notes prior to their maturity, which also would adversely affect their
investment.
Ratings of the 5.125% senior notes may not reflect all risks of an investment in the 5.125% senior notes, and changes in our credit
ratings or associated outlooks could adversely affect the market price of the notes.
Our long-term debt is currently rated by
nationally recognized statistical rating organizations. A debt rating is not a recommendation to purchase, sell or hold the 5.125% senior notes. Moreover, a debt rating does not reflect all risks of an investment in the notes and does not take into
account market price or suitability for a particular investor.
The market price for the notes is based on a number of factors, including
our ratings and associated outlooks with major rating agencies. Rating agencies revise their ratings and associated outlooks for the companies that they follow from time to time, and our ratings and associated outlooks may be revised or withdrawn in
their entirety at any time. We cannot be sure that rating agencies will maintain their current ratings and associated outlooks. We undertake no obligation to maintain the ratings and associated outlooks or to advise holders of the notes of any
change in ratings or associated outlooks. A negative change in our ratings or associated outlooks could have an adverse effect on the market price or liquidity of the notes.
Changes in the credit markets could adversely affect the market price of the 5.125% senior notes.
The market price for the 5.125% senior notes is based on a number of factors, including:
|
|
|
the prevailing interest rates being paid by other companies similar to us; and
|
|
|
|
the overall condition of the financial markets.
|
The condition of the credit markets and
prevailing interest rates have fluctuated in the past and can be expected to fluctuate in the future. Fluctuations in these factors could have an adverse effect on the price and liquidity of the 5.125% senior notes.
There may not be an active trading market for the 5.125% senior notes, which could adversely affect the price of the notes in the secondary market and
your ability to resell the notes should you desire to do so.
We do not intend to apply for listing of the 5.125% senior notes on
any securities exchange, and there may not be an active trading market for the notes.
We cannot make any assurance as to:
|
|
|
the existence of an active trading market for the 5.125% senior notes;
|
|
|
|
the liquidity of any trading market that may exist;
|
|
|
|
the ability of holders to sell their notes; or
|
|
|
|
the price at which the holders would be able to sell their notes.
|
Neither CF&Co., nor any
of our other affiliates, has any obligation to make a market in our 5.125% senior notes, and CF&Co. or any such other affiliate may discontinue market-making activities at any time without notice.
The trading market for and the future market price of the 5.125% senior notes will depend on many factors, including prevailing interest
rates, our credit ratings and associated outlooks published by the rating agencies that rate our indebtedness, the market for similar securities and our operating performance and financial condition. If an active trading market for the notes does
exist, there is no assurance that it will continue. If an active trading market for the notes does not exist or does not continue, the market price and liquidity of the notes are likely to be adversely affected, and notes traded after their purchase
may trade at a discount from their purchase price.
We may not be able to repurchase the 5.125% senior notes upon a Change of Control Triggering
Event.
Upon the occurrence of a Change of Control Triggering Event (as defined in Description of 5.125% Senior
NotesOffer to Repurchase Upon a Change of Control Triggering Event), unless we have exercised our right to redeem the 5.125% senior notes as described under Description of 5.125% Senior NotesOptional Redemption, holders
of notes will have the right to require us to
4
repurchase all or any part of their notes at a price in cash equal to 101% of the then-outstanding aggregate principal amount of the notes repurchased plus accrued and unpaid interest, if any, on
the notes repurchased, to, but excluding, the date of purchase. If we experience a Change of Control Triggering Event, we can offer no assurance that we would have sufficient financial resources available to satisfy our obligations to repurchase any
or all of the notes should any holder elect to cause us to do so. Our failure to repurchase the notes as required would result in a default under the indenture, which in turn could result in defaults under agreements governing certain of our other
indebtedness, including the acceleration of the payment of any borrowings thereunder, and have material adverse consequences for us and the holders of the notes.
5
DESCRIPTION OF THE 5.125% SENIOR NOTES
We issued the 5.125% senior notes under a base indenture, as supplemented by a supplemental indenture (which we refer to collectively as the
indenture governing the 5.125% senior notes), that we, as issuer, entered into with U.S. Bank National Association, as trustee, and that have been filed as exhibits to the registration statement of which this prospectus is a part. The
statements made in this section relating to the 5.125% senior notes are summaries of the material provisions thereof and do not purport to be complete and are subject to, and are qualified in their entirety by reference to, all of the provisions of
the 5.125% senior notes, such indenture and such supplemental indenture, including the definitions therein of certain terms. You should read these documents carefully to fully understand the terms of the 5.125% senior notes because they, and not
this description, will define your rights as holders of the 5.125% senior notes.
Capitalized terms used but not otherwise defined
herein shall have the meanings given to them in the notes or the indenture, as applicable. In this description, the terms the Company, we, us and our refer only to BGC Partners, Inc. and not to any of
its subsidiaries.
The registered holder of a note will be treated as the owner of it for all purposes. Only registered holders
will have rights under the indenture.
General
The 5.125% senior notes are our senior unsecured obligations and rank equally in right of payment with all of our other senior unsecured
indebtedness from time to time outstanding. The 5.125% senior notes will mature on May 27, 2021, unless previously redeemed or repurchased in full by us as provided below under Optional Redemption or Offer to
Repurchase Upon a Change of Control Triggering Event.
The 5.125% senior notes bear interest at the rate of 5.125% per annum from
May 27, 2016, to the stated maturity or date of earlier redemption. Interest on the 5.125% senior notes is payable semi-annually in arrears on each May 27 and November 27, commencing on November 27, 2016, to the persons in whose
names such 5.125% senior notes were registered at the close of business on the immediately preceding May 12 and November 12 (whether or not a business day), respectively.
Interest payments in respect of the 5.125% senior notes will equal the amount of interest accrued from and including the immediately preceding
interest payment date in respect of which interest has been paid or duly provided for (or from and including the date of issue, if no interest has been paid or duly provided for with respect to the 5.125% senior notes), to, but excluding, the
applicable interest payment date or stated maturity date or date of early redemption, as the case may be. Interest on the 5.125% senior notes will be computed on the basis of a
360-day
year comprised of twelve
30-day
months. The principal and interest (including any additional interest), if any, on the 5.125% senior notes will be payable through The Depository Trust Company, which we refer to as
Depository, as described under
Same-Day
Funds Settlement and Payment.
If an interest payment date or the stated maturity date or date of early redemption of the 5.125% senior notes falls on a Saturday, Sunday or
other day on which banking institutions in The City of New York are authorized or obligated by law or executive order to close, the required payment due on such date will instead be made on the next business day. No further interest will accrue as a
result of such delayed payment.
We issued the 5.125% senior notes initially in an aggregate principal amount of $300.0 million. The
indenture does not limit the aggregate principal amount of the debt securities which we may issue thereunder and provides that we may issue debt securities thereunder from time to time in one or more series. We may, from time to time, without the
consent of or notice to holders of the 5.125% senior notes, issue and sell additional debt securities ranking equally and ratably with the 5.125% senior notes in all respects and having the same terms as the 5.125% senior notes (other than the issue
date, and to the extent applicable, issue price, initial date of interest accrual and initial interest payment date of such additional debt securities), so that such additional debt securities shall be consolidated and form a single series with the
5.125% senior notes for all purposes, including voting; provided, that such additional debt securities are fungible with the previously issued 5.125% senior notes for U.S. federal income tax purposes.
We have agreed in the indenture to use the net proceeds from the initial offering of the 5.125% senior notes (after deducting the initial
purchasers discount and expenses paid by us in connection with such offering of the notes) to make loans to our subsidiaries pursuant to one or more promissory notes. So long as the 5.125% senior notes are outstanding, (1) the aggregate
principal amount of all such promissory 5.125% senior notes shall be not less than the amount of the net proceeds from the offering of the 5.125% senior notes (or if less, the aggregate principal amount of 5.125% senior notes then outstanding),
(2) such promissory 5.125% senior notes shall bear interest at rates that shall not be less than that borne by the 5.125% senior notes and (3) such promissory 5.125% senior notes shall have terms not later than the stated maturity date of
the notes; provided, that any transfer of such obligation
7
from one subsidiary to another or any refinancing of any such obligation by another subsidiary shall be permitted from time to time. We further agreed that for so long as the 5.125% senior notes
remain outstanding, any indebtedness for borrowed money we incur after the date of original issuance of the 5.125% senior notes in one transaction, or in a series of related transactions, that is in excess of $25.0 million will be subject to a
similar covenant.
The 5.125% senior notes have been issued only in fully registered form without coupons in minimum denominations of
$2,000 and integral multiples of $1,000 in excess thereof. The 5.125% senior notes may be presented for transfer (duly endorsed or accompanied by a written instrument of transfer, if so required by us or the security registrar) or exchanged for
other 5.125% senior notes (containing identical terms and provisions, in any authorized denominations, and of a like aggregate principal amount) at the office or agency maintained by us for such purposes (initially the corporate trust office of the
Trustee). Such transfer or exchange will be made without service charge, but we may require payment of a sum sufficient to cover any tax or other governmental charge and any other expenses then payable. Prior to the due presentment of a note for
registration of transfer, we, the Trustee and any other agent of ours or the Trustee may treat the registered holder of each note as the owner of such note for the purpose of receiving payments of principal of and interest on such note and for all
other purposes whatsoever.
The indenture does not contain any provisions that would limit our ability to incur unsecured indebtedness or
that would afford holders of the 5.125% senior notes protection in the event of a sudden and significant decline in our credit quality or a takeover, recapitalization or highly leveraged or similar transaction involving us. Accordingly, we could in
the future enter into transactions that could increase the amount of indebtedness outstanding at that time or otherwise affect our capital structure or credit rating.
The 5.125% senior notes are not be entitled to the benefit of any mandatory redemption or sinking fund.
Optional Redemption
At any time and from
time to time, we will be entitled at our option to redeem the notes, in whole or in part, at a redemption price equal to the greater of (i) 100% of the aggregate principal amount of the 5.125% senior notes to be redeemed and (ii) the sum
of the present values of the Remaining Scheduled Payments (as defined below), plus, in each case, accrued and unpaid interest thereon to, but excluding, the redemption date, subject to the rights of holders of the 5.125% senior notes to be redeemed
on the relevant record date to receive interest due on the relevant interest payment date.
In determining the present values of the
Remaining Scheduled Payments, we will discount such payments to the redemption date on a semi-annual basis (assuming a
360-day
year consisting of twelve
30-day
months)
using a discount rate equal to the Treasury Rate plus 50 basis points.
The following terms are relevant to the determination of the
redemption price:
Comparable Treasury Issue means the United States Treasury security selected by an Independent Investment
Banker as having an actual or interpolated maturity comparable to the remaining term of the 5.125% senior notes to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the remaining term of such notes.
Comparable Treasury Price
means, with respect to any redemption date, (1) the arithmetic average of the applicable Reference Treasury Dealer Quotations for such redemption date after excluding the highest and lowest Reference Treasury Dealer Quotations, (2) if the
Company obtains fewer than four applicable Reference Treasury Dealer Quotations, the arithmetic average of all applicable Reference Treasury Dealer Quotations for such redemption date or (3) if only one Reference Treasury Dealer Quotation is
received, such quotation.
Independent Investment Banker means one of the Reference Treasury Dealers, or their respective
successors, as may be appointed from time to time by the Company; provided, however, that if the foregoing ceases to be a primary U.S. Government securities dealer in the United States (a primary treasury dealer), we will substitute
another primary treasury dealer.
Reference Treasury Dealer means Merrill Lynch, Pierce, Fenner & Smith Incorporated
and three other primary treasury dealers selected by the Company, and each of their respective successors and any other primary treasury dealers selected by the Company.
Reference Treasury Dealer Quotations means, with respect to each Reference Treasury Dealer and any redemption date, the arithmetic
average, as determined by the Company, of the bid and asked prices for the applicable Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Company by such Reference Treasury Dealer as of
3:30 p.m., New York City time, on the third business day preceding such redemption date.
8
Remaining Scheduled Payments means, with respect to any note to be redeemed, the
remaining scheduled payments of the principal thereof and interest thereon that would be due after the related redemption date but for such redemption; provided, however, that, if such redemption date is not an interest payment date with respect to
such note, the amount of the next scheduled interest payment thereon will be reduced by the amount of interest accrued thereon to such redemption date.
Treasury Rate means, with respect to any redemption date, the rate per annum equal to the semi-annual equivalent yield to maturity
(computed as of the third business day immediately preceding that redemption date) of the applicable Comparable Treasury Issue. In determining this rate, the Company will assume a price for the applicable Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the applicable Comparable Treasury Price for such redemption date.
Offer to Repurchase Upon a Change of
Control Triggering Event
If a Change of Control Triggering Event occurs, unless we have exercised our right to redeem the 5.125%
senior notes as described above, holders of 5.125% senior notes will have the right to require us to repurchase all or any part (in minimum original principal amounts of $2,000 and integral multiples of $1,000 in excess thereof) of their 5.125%
senior notes pursuant to the offer described below (the Change of Control Offer) on the terms set forth in the notes. In the Change of Control Offer, we will be required to offer payment in cash equal to 101% of the then outstanding
aggregate principal amount of 5.125% senior notes repurchased plus accrued and unpaid interest, if any, on the 5.125% senior notes repurchased, to, but not including, the date of purchase (the Change of Control Payment). Within 30 days
following any Change of Control Triggering Event, we will be required to mail a notice to holders of 5.125% senior notes (with a copy to the Trustee) describing the transaction or transactions that constitute the Change of Control Triggering Event
and offering to repurchase the 5.125% senior notes on the date specified in the notice, which date will be no earlier than 30 days and no later than 60 days from the date such notice is mailed (the Change of Control Payment Date),
pursuant to the procedures required by the 5.125% senior notes and the indenture and described in such notice. We must comply with the requirements of Rule
14e-1
under the Securities Exchange Act of 1934, as
amended (the
Exchange Act
), and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the 5.125% senior notes as a result of a Change of
Control Triggering Event. To the extent that the provisions of any securities laws or regulations conflict with the Change of Control Triggering Event provisions of the 5.125% senior notes, we will be required to comply with the applicable
securities laws and regulations and will not be deemed to have breached our obligations under the Change of Control Triggering Event provisions of the 5.125% senior notes by virtue of such conflicts.
On the Change of Control Payment Date, we will be required, to the extent lawful, to:
|
|
|
accept for payment all 5.125% senior notes or portions thereof validly tendered pursuant to the Change of Control Offer;
|
|
|
|
deposit with the Trustee an amount equal to the Change of Control Payment in respect of all 5.125% senior notes or portions of 5.125% senior notes validly tendered; and
|
|
|
|
deliver or cause to be delivered to the Trustee the 5.125% senior notes properly accepted together with a certificate executed by us, stating the aggregate principal amount of 5.125% senior notes or portions of 5.125%
senior notes being purchased.
|
We will not be required to make a Change of Control Offer upon the occurrence of a Change of
Control Triggering Event if a third party makes such an offer in the manner, at the times and otherwise in compliance with the requirements for a Change of Control Offer made by us and the third party repurchases all 5.125% senior notes validly
tendered and not withdrawn under its offer. In addition, we will not repurchase any 5.125% senior notes if there has occurred and is continuing on the Change of Control Payment Date an event of default under the indenture, other than a default in
the payment of the Change of Control Payment upon a Change of Control Triggering Event.
The change of control feature of the 5.125%
senior notes may in certain circumstances make more difficult or discourage a sale or takeover of us and, thus, the removal of incumbent management. We could, in the future, enter into certain transactions, including acquisitions, refinancings or
other recapitalizations, that would not constitute a Change of Control under the 5.125% senior notes, but that could increase the amount of our indebtedness outstanding at such time or otherwise affect our capital structure or credit ratings on the
notes.
For purposes of the foregoing discussion of a repurchase at the option of holders, the following definitions are applicable:
Below Investment Grade Rating Event means that both Rating Agencies (as defined below) shall have ceased to rate the 5.125% senior
notes at an Investment Grade Rating on any date during the period (the Trigger Period) commencing 60 days prior to
9
the first public announcement by the Company of any Change of Control (or pending Change of Control) and ending 60 days following consummation of` such Change of Control (which Trigger Period
will be extended following consummation of a Change of Control for so long as either of the Rating Agencies has publicly announced that it is considering a possible ratings change). If a Rating Agency is not providing a rating for the 5.125% senior
notes at the commencement of any Trigger Period, the 5.125% senior notes will be deemed to have ceased to be rated an Investment Grade Rating by such Rating Agency during that Trigger Period.
A Change of Control will be deemed to have occurred at such time after the original issuance of the 5.125% senior notes when any
of the following has occurred:
(1) a person or group within the meaning of Section 13(d) of
the Exchange Act other than us, our subsidiaries, our and their respective employee benefit plans and any Permitted Holder, has become the direct or indirect beneficial owner, as defined in Rule
13d-3
under the Exchange Act, of our capital stock representing, in the aggregate, more than 50% of the voting power of all classes of our capital stock; or
(2) one or more Permitted Holders shall cease to (i) own and control, beneficially, capital stock of ours that possesses
the voting power under normal circumstances to cast 50% or more of the total votes entitled to be cast for the election of directors of ours; or (ii) have the voting power or the contractual right to elect a majority of our directors; or
(3) our liquidation or dissolution or the stockholders of the Company approve any plan or proposal for our liquidation or
dissolution; or
(4) any conveyance, transfer, sale, lease or other disposition of all or substantially all of the
properties and assets of ours to another person, other than:
(i) that does not result in any reclassification, conversion,
exchange or cancellation of our outstanding equity interests; or
(ii) pursuant to which holders of our outstanding equity
interests, immediately prior to the transaction, have the entitlement to exercise, directly or indirectly, 50% or more of the total voting power of all equity interests entitled to vote generally in elections of directors or managers of the
continuing or surviving or successor entity immediately after giving effect to such issuance; or
|
|
|
any transfer of assets or similar transaction solely for the purpose of changing our jurisdiction of organization and resulting in a reclassification, conversion or exchange of our outstanding equity interests, if at
all, solely into outstanding equity interests of the surviving entity or a direct or indirect parent of the surviving entity; or
|
|
|
|
any conveyance, transfer, sale, lease or other disposition with or into any of our subsidiaries, so long as such conveyance, transfer, sale, lease or other disposition is not part of a plan or a series of transactions
designed to or having the effect of merging or consolidating with, or conveying, transferring, selling, leasing or disposing all or substantially all our properties and assets to, any other person.
|
Notwithstanding the foregoing, no Change of Control will be deemed to have occurred in the event any successor issuer of the 5.125% senior
notes shall be a corporation so long as one or more Permitted Holders shall maintain the beneficial ownership of shares of the capital stock of such successor possessing the voting power under normal circumstances to elect, or one or more Permitted
Holders shall have the contractual right to elect, a majority of the directors of such successor corporation. Notwithstanding the foregoing, a transaction will not be deemed to result in a Change of Control if (a) Cantor Fitzgerald, L.P.
becomes a wholly owned subsidiary of a holding company and (b) the holders of the voting capital stock of such holding company immediately following that transaction are substantially the same as the holders of Cantor Fitzgerald, L.P.s
voting partnership interests immediately prior to that transaction.
Change of Control Triggering Event means the occurrence
of both a Change of Control and a Below Investment Grade Rating Event.
Fitch means Fitch Ratings.
10
Investment Grade Rating means a rating equal to or higher than
BBB-
(or the equivalent) by Fitch or
BBB-
(or the equivalent) by S&P.
Permitted Holder means Howard W. Lutnick, any Person controlled by him or any trust established for Mr. Lutnicks
benefit or for the benefit of his spouse, any of his descendants or any of his relatives, in each case, so long as he is alive and, upon his death or incapacity, any person who shall, as a result of Mr. Lutnicks death or incapacity,
become a beneficial owner (as defined in Rule
13d-3
under the Exchange Act) of the Companys capital stock by operation of a trust, by will or the laws of descent and distribution or by
operation of law.
Person means an individual, a corporation, a limited liability company, an association, a partnership, a
joint venture, a joint stock company, a trust, an unincorporated organization or a government or agency or political subdivision thereof.
Rating Agencies means (1) each of Fitch and S&P; and (2) if either of Fitch or S&P ceases to rate the 5.125%
senior notes or fails to make a rating of the 5.125% senior notes publicly available for reasons outside of our control, a nationally recognized statistical rating organization within the meaning of Section 3(a)(62) of the Exchange
Act, selected by us (as certified by a resolution of our Board of Directors) as a replacement agency for Fitch or S&P, or both of them, as the case may be.
S&P means Standard & Poors Ratings Services, a division of The McGraw-Hill Companies, Inc.
Certain Covenants
Limitations on Liens on Stock of
Subsidiaries
Under the indenture, we covenant that, so long as any of the 5.125% senior notes are outstanding, we will not permit
any Designated Subsidiary to, create, assume, incur, guarantee or otherwise permit to exist any Indebtedness secured by any mortgage, pledge, lien, security interest or other encumbrance (a lien) upon any shares of capital stock of any
Designated Subsidiary directly or indirectly held by us (whether such capital stock is now owned or hereafter acquired) without effectively providing concurrently that the 5.125% senior notes (and, if we so elect, any other Indebtedness of ours that
is not subordinate to the 5.125% senior notes and with respect to which the governing instruments of such Indebtedness require, or pursuant to which we are otherwise obligated, to provide such security) will be secured equally and ratably with, or
prior to, such Indebtedness for at least the time period such other Indebtedness is so secured. The foregoing will not apply to liens on the securities of any entity existing at the time it becomes a Designated Subsidiary (and any extensions,
renewals or replacements thereof).
For purposes of the indenture, capital stock of any Person means any and all shares,
interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, including preferred stock, but excluding any debt securities convertible into such equity.
The term Designated Subsidiary means each of (i) BGC Holdings, L.P. (BGC Holdings), (ii) BGC Global
Holdings, L.P. (BGC Global), (iii) BGC Partners, L.P. (BGC US), and (iv) any other direct or indirect subsidiary now owned or hereafter acquired by us for which (a) the Net Assets constitute, as of the last day
of the most recently ended fiscal quarter, 5% or more of our Total Stockholders Equity or (b) the net revenues constitute, as of the last day of the most recently ended fiscal quarter, 10% or more of the consolidated net revenues of ours
during the most recently ended period of four consecutive fiscal quarters; provided, however, that the following shall not be Designated Subsidiaries:
|
(1)
|
any Person in which the Company or any of its subsidiaries does not own sufficient equity or voting interests to elect a majority of the directors (or persons performing similar functions);
|
|
(2)
|
any Person whose financial results would not be consolidated with those of the Company and its consolidated subsidiaries in accordance with accounting principles generally accepted in the United States of America
(U.S. GAAP); and
|
|
(3)
|
any subsidiary of any Person described in clauses (1) and (2) above.
|
The term
Indebtedness means, without duplication, with respect to any Person, whether or not contingent:
|
(1)
|
the principal of and any premium and interest on (a) indebtedness of such Person for money borrowed or (b) indebtedness evidenced by notes, debentures, bonds or other similar instruments for the payment of
which such Person is responsible or liable;
|
11
|
(2)
|
all capitalized lease obligations of such Person;
|
|
(3)
|
all obligations of such Person incurred or assumed as the deferred purchased price of property, all conditional sale obligations and all obligations under any title retention agreement (but excluding trade accounts
payable arising in the ordinary course of business);
|
|
(4)
|
all obligations of such Person for the reimbursement of any obligor on any bankers acceptance, bank guarantees, surety bonds or similar credit transaction; and
|
|
(5)
|
any amendments, modifications, refundings, renewals or extensions of any indebtedness or obligation described as Indebtedness in clauses (1) through (4) above;
|
if and to the extent any of the preceding items (other than letters of credit) would appear as a liability upon a balance sheet of such Person prepared in
accordance with U.S. GAAP; provided, however, the term Indebtedness includes all of the following items, whether or not any such items would appear as a liability on a balance sheet of such Person prepared in accordance with generally
accepted accounting principles:
|
(i)
|
all Indebtedness of others secured by any mortgage, pledge, lien, security interest or other encumbrance on any property or asset of such Person (whether or not such Indebtedness is assumed by such Person);
|
|
(ii)
|
to the extent not otherwise included, any guarantee by such person of Indebtedness of any other Person; and
|
|
(iii)
|
preferred stock or other equity interests providing for mandatory redemption or sinking fund or similar payments issued by any subsidiary of such Person.
|
The term Net Assets means, with respect to any Person, the excess (if positive) of (a) such Persons consolidated assets
over (b) such Persons consolidated liabilities, in each case determined in accordance with U.S. GAAP.
The term Total
Stockholders Equity means, as of the date of determination, without duplication, all items which in conformity with U.S. GAAP would be included under total stockholders equity on our consolidated statement of financial condition.
For purposes of any determination of total stockholders equity, we may include the amount of any capital to be returned pursuant to the terms of the Amended and Restated Agreement of Limited Partnership of BGC Holdings, as amended from time to
time, to any limited or general partner who has been terminated or withdrawn until such time as the amount of such partners capital has been paid to such limited or general partner pursuant to the terms of such Partnership Agreement plus,
without duplication, redeemable partnership interests representing former partners equity in us. For the avoidance of doubt, Total Stockholders Equity is inclusive of
non-controlling
interests in
subsidiaries on our consolidated statement of financial condition.
Consolidation, Merger or Sale
We may not consolidate or merge with or into, or transfer or lease all or substantially all of our assets to, any Person unless either
(a) we will be the continuing entity or (b) the successor entity or Person to which our assets are transferred or leased is an entity organized under the laws of the United States, any state of the United States or the District of Columbia
and it expressly assumes our obligations on the 5.125% senior notes and under the indenture. In addition, we cannot effect such a transaction unless immediately after giving effect to such transaction, no default or event of default under the
indenture shall have occurred and be continuing. Subject to certain exceptions, when the Person to whom our assets are transferred or leased has assumed our obligations under the 5.125% senior notes and the indenture, we will be discharged from all
our obligations under the 5.125% senior notes and the indenture, except in limited circumstances.
This covenant does not apply to any
recapitalization transaction, a change of control of us or a highly leveraged transaction, unless the transaction or change of control were structured to include a merger or consolidation or transfer or lease of all or substantially all of our
assets.
Modification, Amendment or Waiver
We may from time to time amend or supplement the indenture and the 5.125% senior notes without the consent of registered holders to, among
other things, (i) modify the restrictions on and procedures for resale, attempted resale, and other transfers of the 5.125% senior notes or interests therein to reflect any change in applicable law or regulation (or interpretation thereof) or
in practices relating to the resale or transfer of restricted securities generally or (ii) to cure any ambiguity or defect in and to correct or supplement any provision of the indenture or any note that may be inconsistent with any other
provision in the indenture or the 5.125% senior notes, provided, however, that any such cure, correction or supplement shall not adversely affect the interests of the holders of the 5.125% senior notes in any material respect.
12
With certain exceptions, we may make modifications and amendments of the indenture with the
consent of the registered holders of not less than a majority in aggregate principal amount of the 5.125% senior notes of a series at the time outstanding under the indenture. Compliance with certain covenants may be waived on behalf of registered
holders of notes of a series, either generally or in a specific instance and either before or after the time for compliance with those covenants, with the consent of holders of not less than a majority in aggregate principal amount of the then
outstanding 5.125% senior notes of such series. Nevertheless, without the consent of each registered holder of the 5.125% senior notes affected thereby, no such modification or amendment may, among other things, reduce the principal of or interest
on any of the outstanding 5.125% senior notes, extend the stated maturity of the 5.125% senior notes, change the interest payment dates or terms of payment for the 5.125% senior notes, or reduce the percentage of registered holders necessary to
modify or amend the indenture and the 5.125% senior notes.
Events of Default
Unless otherwise indicated, the term Event of Default, when used in the indenture with respect to the 5.125% senior notes means any
of the following:
|
|
|
failure to pay interest (including any additional interest) for 30 days after the date payment on any note is due and payable;
|
|
|
|
failure to pay principal or premium, if any, on any note when due, either at maturity, upon any redemption, by declaration or otherwise;
|
|
|
|
a default by us in the payment in respect of any Indebtedness for borrowed money, including obligations evidenced by any mortgage, indenture, bond, debenture, note, guarantee or similar instrument, in an aggregate
principal amount of at least $50 million beyond any applicable grace period, or default in the performance or compliance with any term respecting such debt, if as a consequence such debt becomes due and payable before its stated maturity, and
such default shall not have been rescinded or annulled or such Indebtedness shall not have been discharged and such default continues for a period of 15 consecutive days after written notice to us by the Trustee or the holders of not less than 25%
in aggregate principal amount of the 5.125% senior notes;
|
|
|
|
failure by us to perform any other covenant in the indenture or the 5.125% senior notes for 90 days after notice that performance was required; or
|
|
|
|
events related to our bankruptcy, insolvency, reorganization or liquidation.
|
If an Event of
Default relating to the payment of interest (including any additional interest) or principal with respect to the 5.125% senior notes has occurred and is continuing, the Trustee or the holders of not less than 25% in aggregate principal amount of the
5.125% senior notes may declare the entire principal of the 5.125% senior notes to be due and payable immediately.
If an Event of Default
relating to the performance of other covenants occurs and is continuing, then the Trustee or the holders of not less than 25% in aggregate principal amount of the 5.125% senior notes may declare the entire principal amount of the 5.125% senior notes
to be due and payable immediately.
The holders of not less than a majority in aggregate principal amount of the 5.125% senior notes may,
after satisfying conditions, rescind and annul any of the above-described declarations and consequences.
If an Event of Default relating
to events of our bankruptcy, insolvency, reorganization or liquidation occurs and is continuing, then the principal amount of the 5.125% senior notes outstanding, and any accrued interest, will automatically become due and payable immediately,
without any declaration or other act by the Trustee or any holder.
The indenture imposes limitations on suits brought by holders of
5.125% senior notes against us. Except as provided below, no holder of 5.125% senior notes may institute any action against us under the indenture unless:
|
|
|
the holder has previously given to the Trustee written notice of default and continuance of that default;
|
|
|
|
the holders of at least 25% in principal amount of the 5.125% senior notes have requested in writing that the Trustee institute the action;
|
13
|
|
|
the requesting holders have offered the Trustee security or indemnity satisfactory to it for expenses and liabilities that may be incurred by bringing the action;
|
|
|
|
the Trustee has not instituted the action within 60 days after the request; and
|
|
|
|
the Trustee has not received inconsistent direction by the holders of a majority in principal amount of the outstanding notes.
|
Notwithstanding the foregoing, each holder of 5.125% senior notes of any series has the right, which is absolute and unconditional, to receive
payment of the principal of, and premium and interest, if any, on, the 5.125% senior notes when due and to institute suit for the enforcement of any such payment, and such rights may not be impaired without the consent of that holder of notes.
We will be required to file annually with the Trustee a certificate, signed by an officer of the Company, stating whether or not the officer
knows of any default by us in the performance, observance or fulfillment of any condition or covenant of the indenture.
Discharge, Defeasance and
Covenant Defeasance
We can discharge or defease our obligations under the indenture and the 5.125% senior notes as set forth below.
We may discharge our obligations to holders of 5.125% senior notes that have not already been delivered to the Trustee for cancellation
and that have become due and payable within one year (or are scheduled for redemption within one year). We may effect a discharge by irrevocably depositing with the Trustee cash or U.S. government obligations, as trust funds, in an amount certified
to be sufficient to pay when due, whether at maturity, upon redemption or otherwise, the principal of, and premium, if any, and interest on, the notes.
We may also discharge any and all of our obligations to holders of 5.125% senior notes at any time (legal defeasance). We also may
be released from the obligations imposed by any covenants of any outstanding series of debt securities and provisions of the indenture, and we may omit to comply with those covenants without creating an Event of Default (covenant
defeasance). We may effect legal defeasance and covenant defeasance only if, among other things:
|
|
|
we irrevocably deposit with the Trustee cash or U.S. government obligations, as trust funds, in an amount certified to be sufficient to pay when due (whether at maturity, upon redemption, or otherwise) the principal of,
and premium, if any, and interest on all outstanding 5.125% senior notes; and
|
|
|
|
we deliver to the Trustee an opinion of counsel from a nationally recognized law firm to the effect that the holders and beneficial owners of the 5.125% senior notes will not recognize income, gain or loss for U.S.
federal income tax purposes as a result of the legal defeasance or covenant defeasance and that legal defeasance or covenant defeasance will not otherwise alter the holders and beneficial owners U.S. federal income tax treatment of
principal, premium, if any, and interest payments on the 5.125% senior notes, which opinion, in the case of legal defeasance, must be based on a ruling of the Internal Revenue Service or a change in U.S. federal income tax law issued or pronounced
after the date of this prospectus.
|
Although we may discharge or defease our obligations under the indenture as described in
the two preceding paragraphs, we may not avoid, among other things, our duty to register the transfer or exchange of any 5.125% senior notes, to replace any temporary, mutilated, destroyed, lost or stolen 5.125% senior notes or to maintain an office
or agency in respect of the 5.125% senior notes.
Book-Entry System
The certificates representing the 5.125% senior notes have been issued in the form of one or more fully-registered global 5.125% senior notes
without coupons (the Global Note) and have been deposited with, or on behalf of, the Depository and registered in the name of Cede & Co., as the nominee of the Depository. Except in limited circumstances, the 5.125% senior notes
are not issuable in definitive form. Unless and until they are exchanged in whole or in part for the individual 5.125% senior notes represented thereby, any interests in the Global Note may not be transferred except as a whole by the Depository to a
nominee of the Depository or by a nominee of the Depository to the Depository or another nominee of the Depository or by the Depository or any nominee of the Depository to a successor depository or any nominee of such successor.
14
The Depository is under no obligation to provide its services as depositary for the certificates
of any series and may discontinue providing its services at any time. Neither we nor the Trustee will have any responsibility for the performance by the Depository or its direct or indirect participants under the rules and procedures governing the
Depository. As noted above, owners of beneficial interests in the Global Note will not receive certificates representing their interests. However, we will prepare and deliver certificates for the 5.125% senior notes of that series in exchange for
beneficial interests in the Global Note if:
|
|
|
the Depository notifies us that it is unwilling or unable to continue as a depositary for the Global Note of any series or if the Depository ceases to be a clearing agency registered under the Exchange Act and a
successor depositary is not appointed by us within 90 days after the notification or of our becoming aware of the Depositorys ceasing to be so registered, as the case may be;
|
|
|
|
we determine, in our sole discretion, not to have the 5.125% senior notes of any series represented by one or more Global Notes; or
|
|
|
|
an Event of Default has occurred and is continuing with respect to the debt securities of any series, and the Depository wishes to exchange such Global Notes for definitive certificated debt securities.
|
Any beneficial interest in a Global Note that is exchangeable under the circumstances described in the preceding sentence
will be exchangeable for 5.125% senior notes in definitive certificated form registered in the names that the depositary shall direct. It is expected that these directions will be based upon directions received by the depositary from its
participants with respect to ownership of beneficial interests in the Global Note.
The Depository has advised us that the Depository is a
limited-purpose trust company organized under the New York Banking Law, a banking organization within the meaning of the New York Banking Law, a member of the Federal Reserve System, a clearing corporation within the meaning
of the New York Uniform Commercial Code, and a clearing agency registered pursuant to the provisions of Section 17A of the Exchange Act. The Depository holds securities that its participants (Direct Participants) deposit
with the Depository. The Depository also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between
Direct Participants accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and
non-U.S.
securities brokers and dealers, banks, trust
companies, clearing corporations, and certain other organizations. The Depository is a wholly owned subsidiary of The Depository Trust & Clearing Corporation (DTCC). DTCC is the holding company for the Depository, National
Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the Depository system is also available to others such as both
U.S. and
non-U.S.
securities brokers and dealers, banks, trust companies and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or
indirectly.
Conveyance of notices and other communications by the Depository to Direct Participants, by Direct Participants to indirect
participants and by direct and indirect participants to beneficial owners will be governed by arrangements among them, subject to any legal requirements in effect from time to time.
Redemption notices shall be sent to the Depository or its nominee. If less than all of the 5.125% senior notes of a series are being redeemed,
the Depository will reduce the amount of the interest of Direct Participants in such 5.125% senior notes in accordance with its procedures.
A beneficial owner of 5.125% senior notes shall give written notice to elect to have its 5.125% senior notes repurchased or tendered, through
its participant, to the Trustee and shall effect delivery of such 5.125% senior notes by causing the Direct Participant to transfer the participants interest in such 5.125% senior notes, on the Depositorys records, to the Trustee. The
requirement for physical delivery of 5.125% senior notes in connection with a repurchase or tender will be deemed satisfied when the ownership rights in such 5.125% senior notes are transferred by Direct Participants on the Depositorys records
and followed by a book-entry credit of such 5.125% senior notes to the Trustees Depository account.
In any case where a vote may be
required with respect to the 5.125% senior notes of any series, neither the Depository nor Cede & Co. will give consents for or vote such global debt securities. Under its usual procedures, the Depository will mail an omnibus proxy to us as
soon as possible after the record date. The omnibus proxy assigns the consenting or voting rights of Cede & Co. to those Direct Participants to whose accounts the 5.125% senior notes are credited on the record date identified in a listing
attached to the omnibus proxy.
Principal of and premium, if any, and interest, if any, on the Global Note securities will be paid to
Cede & Co., as nominee of the Depository. The Depositorys practice is to credit Direct Participants accounts on the relevant payment date unless the Depository has reason to believe that it will not receive payments on the
payment date. Payments by direct and indirect participants to beneficial owners will be governed by standing instructions and customary practices, as is the case with securities held for the account
15
of customers in bearer form or registered in street name. Those payments will be the responsibility of participants and not of the Depository or us, subject to any legal requirements
in effect from time to time. Payment of principal, premium, if any, and interest, if any, to Cede & Co. is our responsibility, disbursement of payments to Direct Participants is the responsibility of the Depository, and disbursement of
payments to the beneficial owners is the responsibility of direct and indirect participants.
The rules applicable to the Depository and
its Direct Participants are on file with the SEC. The information in this section concerning the Depository and the Depositorys book-entry system has been obtained from sources that we believe to be reliable, but we take no responsibility for
the accuracy thereof.
Same-Day
Funds Settlement and Payment
All payments of principal, premium if any, and interest in respect of 5.125% senior notes in book-entry form will be made by us in immediately
available funds to the accounts specified by the Depository.
Governing Law
The indenture and the 5.125% senior notes are governed by, and construed in accordance with, the laws of the State of New York applicable to
agreements made or instruments entered into and, in each case, performed in that state.
Concerning the Trustee
U.S. Bank National Association is the Trustee under the indenture with respect to the 5.125% senior notes and also serves as the registrar and
paying agent. We maintain corporate trust relationships in the ordinary course of business with the Trustee.
Registration Rights Agreement
Affiliates of Cantor currently hold $15 million aggregate face amount of the $300 million outstanding aggregate face amount of the
5.125% senior notes. The notes held by the Cantor affiliates were acquired from us in the initial offering of the notes, and such Cantor affiliates are our affiliates also. Pursuant to a Registration Rights Agreement, dated as of May 27, 2016,
by and between us and the other parties named therein, such Cantor affiliates, and their respective transferees, have the right to have us file a resale registration statement to enable them to sell the notes that they hold.
16