TeraExchange Merges with MGT Capital for Public Listing

MGT Capital Investments, Inc. (NYSE MKT: MGT) announced today that it has entered into a Letter of Intent (“LOI”) with Tera Group, Inc., (“Tera”) owner of TeraExchange, LLC, a Swap Execution Facility regulated by the Commodity Futures Trading Commission (“CFTC”).

Pursuant to the LOI, both companies indicated they would work diligently to finalize and execute a definitive agreement by March 16, 2015.

MGT will then file a combination S-4 Prospectus and Proxy Statement with the Securities and Exchange Commission. Under the contemplated terms of the agreement, and subject to stockholder approval, MGT will issue shares of its common stock to the current owners of Tera, representing 70% of the pro forma equity of the combined companies at closing.

Tera has played a leading role in the development of bitcoin derivatives. In September 2014, Tera launched on TeraExchange the first regulated Bitcoin derivative products, and a spot Bitcoin price index. Trading of USD/Bitcoin derivatives is subject to the rules and regulations of TeraExchange and the CFTC. The Tera Bitcoin Price Index (“TeraBit”) employs a dynamic algorithm that compiles and filters data on a real-time basis from a number of widely utilized global Bitcoin spot exchanges. The TeraBit Index will be used as the settlement rate for USD/Bitcoin derivatives transactions.

Christian D. Martin, Chairman, Chief Executive Officer and Co-Founder of Tera, commented:

Growing consumer and merchant adoption of bitcoin is driving demand for regulated capital markets solutions. By combining with MGT, Tera will create a unique public offering to support the essential infrastructure needed for a vibrant global bitcoin ecosystem.

H. Robert Holmes, Chairman of MGT’s board of directors, said:

The proposed merger with Tera gives immediate and future value to our stockholders, while creating a robust platform for the growth of the industry’s first publicly listed bitcoin derivatives exchange. The Bitcoin industry attracted over $400 million of investment capital from some of the world’s most prominent investors over the past 12 months; we see our move today as further progress in the broader adoption of the industry.

Tera is led by a management team with a combined 47 years of experience in capital markets and derivative products, 43 years in legal and regulatory, and 46 years in technology development and engineering.

Martin spent more than 20 years in senior trading and management positions at Merrill Lynch and Bank of America, where he was responsible for global trading desks of interest rates, credit, and financing – securities lending transactions.

President, COO and Co-Founder Leonard T. Nuara was formerly a shareholder in the international law firm of Greenberg Traurig LLP. Prior to that, he was Chair of the Technology and Intellectual Property Group at Thacher Proffitt & Wood LLP. He is a nationally recognized leader in the technology and intellectual property fields.

Chief Commercial Officer John Maguire spent 18 years at Goldman Sachs, where he held various roles, including interest rate and cross asset derivative sales, marketing, and business development. Maguire is also the former Global Head of Trading at Bridgewater Associates, the largest hedge fund in the world.