Washington, D.C. 20549
Under the Securities and Exchange Act
of 1934 (Amendment No.. 1)*
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f)
or 13d-1(g), check the following box. ☐
*The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment
containing information which would alter the disclosures provided in a prior cover page.
The information required in the remainder of this cover page
shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act")
or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however,
see the Notes).
Schedule 13D
CUSIP No. 36268W100
|
Page 2 of 9 Pages
|
1
|
NAMES OF REPORTING PERSONS
JB Capital Partners LP
|
2
|
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
|
(a) ☐
(b) ☒
|
3
|
SEC USE ONLY
|
4
|
SOURCE OF FUNDS (SEE INSTRUCTIONS)
WC
|
5
|
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(D) OR 2(E) ☐
|
6
|
CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
|
NUMBER
OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
|
7
|
SOLE VOTING POWER
-0-
|
8
|
SHARED VOTING POWER
2,878,807
|
9
|
SOLE DISPOSITIVE POWER
-0-
|
10
|
SHARED DISPOSITIVE POWER
2,878,807
|
11
|
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
2,878,807
|
12
|
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)
|
☐
|
13
|
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.7%
|
14
|
TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
PN
|
Schedule 13D
CUSIP No. 36268W100
|
Page 3 of 9 Pages
|
1
|
NAMES OF REPORTING PERSONS
Alan Weber
|
2
|
CHECK THE APPROPRIATE BOX IF A MEMBER
OF A GROUP
|
(a) ☐
(b) ☒
|
3
|
SEC USE ONLY
|
4
|
SOURCE OF FUNDS (SEE INSTRUCTIONS)
AF, PF
|
5
|
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(D) OR 2(E) ☐
|
6
|
CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A.
|
NUMBER
OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
|
7
|
SOLE VOTING POWER
15,000
|
8
|
SHARED VOTING POWER
2,878,807
|
9
|
SOLE DISPOSITIVE POWER
15,000
|
10
|
SHARED DISPOSITIVE POWER
2,878,807
|
11
|
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
2,893,807
|
12
|
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)
|
☐
|
13
|
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.7%
|
14
|
TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
IN, IA, HC
|
SCHEDULE 13D
CUSIP No. 36268W100
|
Page 4 of 9 Pages
|
This Statement on Schedule 13D Amendment No. 1 (this "Amendment
No. 1") is filed on behalf of the Reporting Persons with the Securities and Exchange Commission (the "Commission").
This Amendment No. 1 amends the initial Statement of Beneficial Ownership on Schedule 13D (the "Initial Statement") relating
to shares of Common Stock, $0.00001 par value (the "Common Stock"), of Gain Capital Holdings, Inc. (the "Issuer"),
filed on April 22, 2020 with the Commission. Capitalized terms used herein and not otherwise defined herein shall have the same
meanings ascribed to them in the Initial Statement.
|
Item 4.
|
Purpose of Transaction
|
Item 4 of the Initial Statement is hereby amended to add the
following:
On May 27, 2020, JB Capital Partners L.P. sent
a letter to the Board of Directors. JB Capital recommends that the Company repurchase 14,657,089 shares held by VantagePoint Capital
Partners Entities (Vantage), IPGL Limited and IPGL NO.1 Limited (IPGL) at $6.25 per share (increasing tangible book value to $8.75
per share) which is a superior deal for all shareholders compared to the $6.00 merger price. The Board of Directors has a fiduciary
responsibility to all of its stockholders to obtain the highest value.
|
Item 7.
|
Materials to Be Filed as Exhibits
|
Item 7 of the Initial Statement is hereby amended to add the
following:
The filing includes the following exhibits:
|
2.
|
Letter dated as of May 27, 2020 from JB Capital Partners,
LP. to the Board of Directors of Gains Capital Holdings, Inc.
|
(The remainder of this page was intentionally
left blank)
SCHEDULE 13D
CUSIP No. 36268W100
|
Page 5 of 9 Pages
|
SIGNATURE
After reasonable inquiry and to the best of the undersigned's
knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and
correct.
Date: May 27, 2020
|
|
JB Capital Partners, LP
|
|
|
|
|
/s/ Alan Weber
|
|
By:
|
/s/ Alan Weber
|
Alan Weber
|
|
|
Name: Alan Weber
|
|
|
|
Title: General Partner
|
SCHEDULE 13D
CUSIP No. 36268W100
|
Page 6 of 9 Pages
|
Exhibit Index
The following documents are filed herewith:
(The remainder of this page was intentionally
left blank)
SCHEDULE 13D
CUSIP No. 36268W100
|
Page 7 of 9 Pages
|
Exhibit 2
JB Capital Partners L.P.
5 Evans Place
Armonk NY 10504
(646) 442-6701
May 27, 2020
To: The Board of Directors GAIN Capital Holdings, Inc.
As you know from its Schedule 13D filing
with the SEC on April 22, 2020, JB Capital Partners L.P. (“JB Capital”) is the beneficial owner of 2,878,807 shares
of GAIN Capital Holdings (“Gain” or the “Company”), which is 7.7% of Gain’s common stock.
On February 26, 2020 Gain announced it
would be acquired by INTL FCStone Inc. (“INTL”) for $6.00 per share (the “Merger”), and entered into the
Agreement and Plan of Merger among Gain, INTL and Golf Merger Sub I Inc. (“Merger Agreement”). That the Board of Directors
of the Company (the “Board”) believed $6.00 per share was fair and reasonable when just one year prior it refused to
even negotiate with a party offering $6.00 to $7.00 per share is striking, but how it continues to recommend the Merger in light
of the Company’s recent performance is inexplicable.
On April 10, 2020 Gain reported in an 8-K
that commencing February 27, 2020 (first trading day since the Merger Agreement) volatility increased which led to a significant
increase in trading volume and EBITDA and net income. According to the Company’s SEC filings, for the period January
1, 2020 - April 30, 2020, net income was $89.2 million or $2.35 EPS and adjusted EBITDA was $132.7 million. In sharp contrast,
according to the proxy dated May 1,2020, Gain projected net income of just $2.7 million or $.07 EPS and $37 million of EBITDA for
all of 2020.
In other words, as the Company well knows,
its net income in just four months of $89.2 million is more than 33 times its projected net income for the entire
year. While it seems ridiculous and unimaginable that the market volatility that has produced this extraordinary performance
for the Company was “known or reasonably foreseeable” to the Company at the time it entered into the Merger Agreement,
JB Capital understands the Board has refused to recognize the occurrence of a “Company Intervening Event” under Section
6.04 of the Merger Agreement.
Despite the unforeseeable change in macro
events and the improved results at Gain, five of eight Board members continue to recommend the original $6.00 merger price. Selling
for net cash, less than book value and just ignoring Gain’s extraordinarily improved position makes no sense. Of course,
JB Capital will be voting against the Merger, but urges the Board to reconsider the travesty that the Merger has become.
SCHEDULE 13D
CUSIP No. 36268W100
|
Page 8 of 9 Pages
|
Among other things, the Board needs to
address:
● Three Directors oppose the
merger. Two of three Directors on the Strategic Process Committee oppose the merger. What conflicts do the other Directors
have? In the INTL/Gain presentation to investors dated February 27, 2020, it was stated Glenn Stevens expected to continue
leading the business as a segment of INTL. Under what terms and when was this arrangement first raised by Mr. Stevens or
INTL?
● On Page 8 of an Investor Presentation
dated May 15, 2020, filed with the SEC on that same date as an 8-K exhibit, as part of Reasons for the Board Recommendation, the
following is stated: “A potential transaction between GAIN and INTL became known to the public on February 1, 2020 and GAIN
board did not receive any alternative proposals.” According to the Proxy, instead of investigating where this leak came
from, the Board immediately met on the next business day and determined to completely lock-up the deal with the inclusion of a
“no shop” provision and voting agreements with a near mathematical certain majority of stockholders. At the same time
the Company was showing steady improvement even before the COVID-19 volatility, yet there is no indication that the Board considered
the Company’s improving performance.
● The Board has stated that the
improved results subsequent to the merger agreement were due to primarily to COVID-19. But both the Company’s April 10,
2020 8-K and the Proxy identify the period of January 1, 2020 through February 26, 2020 (referred to as the Q120 Pre Signing Period)
as showing markedly improved performance, earning adjusted net income of $13.3 million or $.35 EPS compared to $.07 EPS projected
for all of 2020.
Moreover, the third quarter
2019 earnings presentation included the following headlines—Operating Metrics Showing Positive Signs for Future Organic Growth,
Organic Growth Initiatives Driving Active Account Growth, Benefits From Increased Marketing Investment, AI-Driven Hedging Model
Performance and included 2021 EPS Outlook for $2.15 - $2.40. Obviously, management believed Gain was very well positioned for future
growth. Indeed, Gain has significantly increased the number of new accounts trading with Gain (much to the credit of management
initiatives implemented in marketing over the last few quarters), and sits in a far different position – both economically
and strategically – than it did last year. In this regard, while the Board has used COVID-19 as cover publicly, it has not
explained its rationale for rushing to lock-up a Merger without updating its financial advisor on the Company’s improved
performance before agreeing to the Merger in the first instance.
JB Capital urges the Board to change course;
do its duty to maximize value for its shareholders value rather than destroy our long-term prospects as continuing equity holders
of the Company.
In this
regard, JB Capital recommends that the Company instead offer to repurchase the 14,657,089 shares collectively held by VantagePoint
Capital Partners Entities (Vantage), IPGL Limited and IPGL NO.1 Limited (IPGL) at $6.25 per share.
The repurchase would benefit all shareholders.
Vantage and IPGL would receive a premium to the price that they already agreed to sell their shares and after the buyback
adjusted pro forma book value would increase to $8.75 per share (adjusted for the buy back and potential payment of the $9 million
Termination Fee under Section 11.04 of the Merger Agreement) which would benefit all remaining shareholders.
SCHEDULE 13D
CUSIP No. 36268W100
|
Page 9 of 9 Pages
|
Considering the Company’s balance sheet on a pro forma
basis shows the Acquisition Proposal would create far superior value for Gain’s shareholders:
|
|
April 30, 2020
|
|
Pro Forma – Full Participation*
|
Adj. Tangible Book Value:
|
|
$302.6 million
|
|
$202.00 million
|
Shares Outstanding:
|
|
37.8 million
|
|
23.1 million
|
Adj. Tangible Book Value Per Share
|
|
$8.00
|
|
$8.75
|
|
*
|
Pro Forma is after the repurchase of 14,657,089 shares
at $6.25 per share.
|
The
Board of Directors has a fiduciary responsibility to all of its stockholders to, inter alia, obtain the highest value reasonably
available, which includes the alternative to maintain the Company on a stand-alone basis to execute on its current business plan.
The five directors that continue to support the Merger have apparently forgotten that and have dismissed the Company’s improved
financial condition and performance. JB Capital urges the Board to reconsider the Merger, and to the extent it is Vantage and IPGL
that that has hijacked the process, to repurchase their shares at a slight premium to the Merger price.
Thank you,
Alan Weber
General Partner, JB Capital Partners, L.P.
|
Cc:
|
Marcus E. Montejo, Esq., Prickett, Jones & Elliott,
P.A.
|