Knight in Talks on Potential Rescue: Report

NEW YORK ( TheStreet) -- Knight Capital Group ( KCG) on Sunday was discussing a possible rescue involving TD Ameritrade ( AMTD), Getco and other investors, according to a published media report.

Under the plan being discussed, TD Ameritrade and Getco would be the primary investors in a consortium of more than six entities that would provide a total of $400 million in capital to Knight, The Wall Street Journal reported on its Web site Sunday.

The report cited anonymous sources familiar with the situation and said Knight was also pursuing other potential lifelines.

A Knight representative declined to comment, the Journal said.

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On Wednesday, the Jersey City, N.J. based market maker suffered a software glitch that caused it to send out erroneous trading orders. On Thursday, the company announced it had suffered a $440 million pretax loss as a result.

Under the consortium plan, the investors would purchase debt that would convert into stock at $2.50 a share, the Journal report said.

Jefferies & Co. is involved in setting up the arrangement, the report also said.

Knight Capital's shares, which closed Tuesday at $10.33, plummeted on Wednesday and Thursday on news of the software glitch and related losses, and the stock ended Thursday's session at $2.58.

Shares recovered some of those losses on Friday on news that Knight had obtained a credit line that would keep it operating through the day. The stock ended Friday's session up $1.47, or 57%, at $4.05.
This article was written by a staff member of TheStreet.

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