Nyfix Gains $75 Million Investment From Warburg Pincus And Edelstein As New CEO

NYFIX Inc. (Pink Sheets: NYFX), a leader in technology solutions for the financial marketplace, has entered into a definitive agreement to sell $75million of convertible preferred stock to Warburg Pincus
By None

NYFIX Inc. (Pink Sheets: NYFX), a leader in technology solutions for the financial marketplace, has entered into a definitive agreement to sell $75million of convertible preferred stock to Warburg Pincus, a leading global private equity firm. NYFIX intends to use the net proceeds from the investment, after deducting a 6% placement agent fee and other transaction-related expenses, for general corporate purposes and business development activities. As a result of the deal Howard Edelstein is the new CEO for Nyfix.

Under terms of the agreement, NYFIX will sell 1.5 million shares of preferred stock. Each share of preferred stock is convertible into 10 shares of common stock, and the preferred stock is convertible at a rate of $5.00 per common share, which represents a discount of approximately 6.5% to the closing price of NYFIX common stock on September 1, 2006 and a premium of 9.3% to the last 45 trading day average. As part of the agreement, NYFIX is also issuing Warburg Pincus warrants to purchase 2.25 million shares of NYFIX common stock at an exercise price of $7.75. The shares will be issued in a private placement transaction under Regulation D of the Securities Act of 1933.

Lon Gorman was elected Chairman of the Nyfix Board after Peter Hansen resigned as Chairman. Effective immediately, long-time financial technology executive P. Howard Edelstein becomes NYFIX’s CEO and a member of the NYFIX Board. Current NYFIX CEO Robert Gasser has stepped down from that position and will remain as a Board member and an advisor to the new CEO during a period of transition in leadership, and will thereafter pursue other opportunities.

“The growth opportunities presented by this partnership make this a momentous time in NYFIX’s history and I am excited to be assuming my new role at such a significant juncture,” says Lon Gorman, newly elected Chairman of the NYFIX, Inc. Board of Directors and former Charles Schwab Vice Chairman. “I would like to thank Bob Gasser for his dedication and focus in successfully making NYFIX, Inc. a desirable, stable platform. He and his team were integral to the execution of this transaction. We wish him great success in all of his future endeavors.”

“When I assumed the role of CEO in November, 2005 I had three primary objectives: 1) stabilize client and partner relationships; 2) position the Company for growth by strengthening its management team and organizational structure; and 3) create a transformational event that would move the Company toward a brighter future,” says Mr. Gasser. “I am gratified that in partnership with the NYFIX management team and our loyal and focused colleagues we have achieved those objectives. In addition, NYFIX is gaining a proven financial technology innovator in Howard Edelstein, who is an ideal choice to lead NYFIX into this new era.”

“With over 450 trading counterparties operating at more than 5,000 customer sites around the globe, NYFIX provides an ideal platform to leverage for future growth,” says Mr. Edelstein. “We appreciate the support that NYFIX customers have provided the Company and we believe that our customers should be extremely pleased with today’s developments. We plan to aggressively reinvest in the NYFIX business and evaluate strategic opportunities on a global basis.”

Mr. Edelstein is a veteran in the financial services industry and understands financial institutions’ business, communications and technology requirements. Before joining Warburg Pincus this past March as an entrepreneur-in- residence, he was President and CEO of Radianz, which was ultimately merged into BT. Previously, he served as president and CEO of Thomson Financial ESG which he founded and later merged with the Depository Trust and Clearing Corp.’s TradeSuite business to create OMGEO, the industry utility for straight-through processing. He also has held senior positions at firms such as Dow Jones Telerate and Knight-Ridder.

In conjunction with the closing of the transaction, Cary Davis, a Warburg Pincus Managing Director, and William H. Janeway, Vice Chairman at Warburg Pincus, will join the NYFIX Board of Directors. “NYFIX is well-positioned to capitalize on the changes occurring in the financial markets, and will benefit as the trend towards electronic trading continues,” says Mr. Davis. “Warburg Pincus is pleased to add NYFIX to its growing financial technology portfolio, which already includes companies such as TradeCard, Wall Street Systems and Yodlee.”

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