Knight Capital Group Inc. rejected a last-minute, $500 million rescue-loan offer from Citadel LLC on Aug. 5 as it worked on a competing plan from a group of investors, Bloomberg News reported yesterday. The loan terms would have given Citadel a minority stake in Jersey City, N.J.-based Knight's stock and an interest in the market maker's HotSpot foreign-exchange subsidiary. Citadel, the $12.5 billion hedge fund run by billionaire Ken Griffin, competes with Knight's market-making and electronic-trading business. Citadel, which had walked away from a previous round of talks on Aug. 4, made the offer as Knight Capital was completing a $400 million capital infusion from a group of investors led by Jefferies Group Inc. That transaction, which was completed on Sunday, gives the new investors rights to take a more than 70 percent stake in Knight.
