The Knight Capital Group reached a deal on Sunday to secure a financial lifeline from an investor group that included TD Ameritrade and the Blackstone Group, capping its efforts to stay alive, The New York Times reported yesterday. The lifeline came together days after the trading firm disclosed a $440 million trading loss tied to a glitch in its software that sent shares in 148 companies gyrating on Wednesday. Under the terms of the plan, the new investors would receive securities that give them the right to buy new shares in Knight at a price of roughly $1.50 each. The rescue package, which was arranged by the Jefferies Group and is worth about $400 million, will significantly dilute the holdings of existing shareholders, with the new investors owning roughly 70 percent of the firm, but it will leave Knight alive and independent, averting a potentially messy bankruptcy.
