WEST DES MOINES, Iowa, Aug. 20, 2007 (PRIME NEWSWIRE) -- In light of the recent news regarding Sentinel Management and its liquidity concerns, FCStone Group, Inc. (Nasdaq:FCSX), a commodity risk management firm, has assessed its exposure to Sentinel's recent sale of certain of the assets it manages, including a certain limited amount of the Company's segregated assets, to Citadel Investment Group LLC at discounts believed to be up to 30%. Sentinel has informed FCStone that it expects to distribute to FCStone at least 75% of the value of FCStone's assets held by Sentinel. Based on this information, FCStone anticipates that the resolution of Sentinel's liquidity concerns is likely to cause the Company to incur a one-time after-tax charge of approximately $3.5 million in the current quarter.
"In the face of these recent developments, we felt it important to inform both our customers as well as our shareholders that Sentinel's liquidity issues will not affect FCStone's ability to serve our customers, nor will it impact customer funds in any way," said Pete Anderson, President and Chief Executive Officer. "While the situation with Sentinel is unfortunate and will have a slight negative financial impact on our results during the quarter, we remain confident in our ability to continue to execute across all of our operating segments and are extremely pleased with our results to date. More importantly, it is worth noting that our additional segregated funds are invested in firms that we believe are of the highest quality, and this event will not impact the momentum that FCStone has generated over the past fiscal year that will be reflected in this quarter's sales and profit results."
FCStone will continue to operate in the best interest of its clients and shareholders in order to protect the capital and integrity of their funds and resources. As a result, FCStone is pursuing its legal remedies against Sentinel with respect to the remaining value and reserves the right to pursue legal remedies against other involved parties, such as Citadel. Sentinel is a registered futures commission merchant, or FCM, and is an Illinois-based money manager that provides cash management services to FCMs, among other clients.
About FCStone Group, Inc.
FCStone Group, Inc., along with its affiliates, is an integrated commodity risk management company providing risk management consulting and transaction execution services to commercial commodity intermediaries, end-users and producers. The firm assists primarily middle market customers in optimizing their profit margins and mitigating exposure to commodity price risk. In addition to risk management consulting services, FCStone, LLC, operates one of the leading independent clearing and execution platforms for exchange-traded futures and options contracts. FCStone Group, Inc., serves more than 7,500 customers and in the 12 months ended May 31, 2007, executed 54.1 million derivative contracts in the exchange-traded and over-the-counter markets. In addition to renewable fuels, the FCStone Group companies work in all the major commodity areas including agriculture, energy, foods, forestry, and currency exchange. Headquartered in the Midwest, it has offices located throughout the world and is a clearing member of all major North American Futures exchanges. FCStone Group, Inc., trades on the NASDAQ Global Select Market under the symbol "FCSX."
Forward-Looking Statements
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We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. They can be affected by inaccurate assumptions, including the risks, uncertainties and assumptions described in the Company's filings with the Securities and Exchange Commission. In light of these risks, uncertainties and assumptions, the forward-looking statements in this press release may not occur and actual results could differ materially from those anticipated or implied in the forward-looking statements. When you consider these forward-looking statements, you should keep in mind these risk factors and other cautionary statements in this press release.
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