Toronto, September 30, 2020 – GMP Capital Inc. (“GMP” or the “Company”) (TSX: GMP) today urged common shareholders to vote for all proposed resolutions, including the previously announced transaction (the “RGMP Transaction”) to consolidate 100% ownership of Richardson GMP Limited (“RGMP”) under GMP. The votes on these resolutions will take place at the Company’s upcoming annual and special meeting (the “Meeting”) of common shareholders.
In light of the settlement between GMP and Kevin Sullivan disclosed on September 28, 2020, the vote is no longer contested. For that reason, GMP confirms that it intends to hold a virtual-only Meeting. As described in the Company’s Management Information Circular dated September 8, 2020 (the “Information Circular”), the Meeting is scheduled for October 6, 2020 at 10 am (Prevailing Eastern Time).
GMP is also providing an update on the impact of the proposed substantial issuer bid (“SIB”) at $2.42 per common share that is contemplated under the terms of the settlement with Mr. Sullivan. The SIB will be commenced prior to the closing of the RGMP Transaction. Other than customary conditions, the only condition for take up will be closing of the RGMP Transaction. If fully subscribed the SIB will return $40 million to minority GMP common shareholders.
The table below shows the percentage ownership for all three of GMP’s common shareholder groups, comparing the impact of settlement with GMP’s August 2020 RGMP Transaction proposal.
| Common Shareholder Group | September 28, 2020 Settlement (% ownership post SIB and post RGMP Transaction)(1) | August 2020 proposal(% ownership post RGMP Transaction)(2) |
| GMP Minority | 25.58% | 31.41% |
| Richardson Financial Group Limited | 43.77% | 40.07% |
| RGMP Partners | 30.65% | 28.52% |
| Total | 100.00% | 100.00% |
(1) Assumes 159.2 million common shares outstanding if the SIB is fully subscribed
(2) Assumes 182.3 million common shares outstanding
GMP anticipates that the net impact of the settlement, including the SIB, will reduce the cash available for recruitment and other growth initiatives by approximately $29 million from a previously anticipated level of approximately $60 million. The reduction will in turn limit recruitment, subject to the Company finding other sources of capital. Common shareholders should refer to the table entitled “Pro-forma Uses of Cash” on page 9 of the Information Circular for details on the intended pro forma uses of cash proposed by GMP.
GMP has determined that the settlement, including the SIB, represents a better outcome than the risk of continued uncertainty and disruption to our investment advisor partners, our clients and our business.
FORWARD-LOOKING INFORMATION
This press release contains “forward-looking information” as defined under applicable Canadian securities laws. This information includes, but is not limited to, statements concerning our objectives, our strategies to achieve those objectives, as well as statements made with respect to management’s beliefs, plans, estimates, projections and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Forward-looking information generally can be identified by the use of forward-looking terminology such as “outlook”, “objective”, “may”, “will”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “should”, “plans” or “continue”, or similar expressions suggesting future outcomes or events. Such forward-looking information reflects management’s current beliefs and is based on information currently available to management. The forward-looking information contained herein is expressly qualified in its entirety by this cautionary statement.
The forward-looking statements included in this press release, including statements regarding the RGMP Transaction, the nature of GMP’s growth strategy going forward and execution of any of its potential plans, are not guarantees of future results and involve numerous risks and uncertainties that may cause actual results to differ materially from the potential results discussed in the forward-looking statements. In respect of the forward-looking statements and information concerning the consolidation of 100% of ownership in Richardson GMP, and the Company’s strategy going forward, management has provided same based on reliance on certain assumptions it considers reasonable at this time including the timing of the completion of any transaction involving Richardson GMP and that any conditions precedent can be satisfied. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this news release.
Risks and uncertainties related to the RGMP Transaction include, but are not limited to: failure of GMP and RFGL to obtain the required shareholders and regulatory approvals for, or satisfy other conditions to effect, the RGMP Transaction; the risk that the RGMP Transaction may involve unexpected costs, liabilities or delays; the risk that, prior to or as a result of the completion of the RGMP Transaction, the business of GMP and/or Richardson GMP may experience significant disruptions, including loss of clients or employees due to transaction related uncertainty, industry conditions or other factors; risks relating to employee retention; the risk that legal proceedings may be instituted against GMP or Richardson GMP; risks related to the diversion of management’s attention from GMP’s ongoing business operations; and risks related to the COVID-19 global pandemic. For a description of additional risks that could cause our actual results to materially differ from our current expectations, see the “Risk Management” and “Risk Factors” sections of GMP’s most recent Annual and Interim MD&A and the “Risk Factors” section in the Company’s AIF. For additional information on the risk factors related to the RGMP Transaction, see “The RGMP Transaction – Reasons for the RGMP Transaction” and “Risk Factors” in the Management Information Circular. Material assumptions and factors underlying the forward-looking information in this press release include, but are not limited to, those set out in “Business Environment – Outlook” in GMP’s most recent Annual and Interim MD&A. GMP’s most recent Annual and Interim MD&A and the Management Information Circular are filed under the Corporation’s profile on SEDAR at www.sedar.com.
Although forward-looking information contained in this press release is provided based on management’s reliance on certain assumptions it considers reasonable, there can be no assurance that such expectations will prove to be correct. Certain statements included in this press release may be considered a “financial outlook” for purposes of applicable Canadian securities laws, and as such, the financial outlook may not be appropriate for purposes other than this press release. Readers should not place undue reliance on the forward-looking statements and information contained in this press release. When relying on forward-looking statements to make decisions, readers should carefully consider the foregoing factors, the list of which is not exhaustive.
The forward-looking information contained in this press release is made as of the date of this press release, and should not be relied upon as representing GMP’s views as of any date subsequent to the date of this press release. Except as required by applicable law, Management and the Board undertake no obligation to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise.
ABOUT GMP CAPITAL INC.
GMP currently operates through two business segments: Operations Clearing and Wealth Management; and a corporate segment. Operations Clearing provides carrying broker services to Richardson GMP and other third parties, including trade execution, clearing, settlement, custody, and certain other middle- and back-office services, and other expenses associated with providing such services. Wealth Management consists of GMP’s non-controlling ownership interest in Richardson GMP. Richardson GMP, one of Canada’s largest independent wealth management firms, is focused on providing exclusive and comprehensive wealth management and investment services delivered by an experienced team of investment professionals. GMP is listed on the Toronto Stock Exchange under the symbol “GMP”. For further information, please visit our corporate website at gmpcapital.com.
For further information please contact:
GMP Capital Inc.
Rocco Colella, Managing Director, Investor Relations
145 King Street West, Suite 200, Toronto, Ontario M5H 1J8
Tel: (416) 941-0894; [email protected] or [email protected]
Media contact:
Longview Communications and Public Affairs
Boyd Erman (416) 523-5885; [email protected]
Alan Bayless (604) 694-6035; [email protected]
Shareholders with questions may contact the Company’s strategic shareholder advisor and proxy solicitation agent, Kingsdale Advisors, at 1-866-879-7644 toll free in North America, or call collect outside North America at 1-416-867-2272 or by email at [email protected].