TORONTO, August 6, 2019 – GMP Capital Inc. (“GMP” or the “Company”) (TSX: GMP) is pleased to announce that, at the special meeting of holders (“Common Shareholders”) of the Company’s common shares (the “Common Shares”) held earlier today (the “Meeting”), Common Shareholders voted overwhelmingly to approve the special resolution (the “Transaction Resolution”) authorizing the previously announced sale of substantially all of the Company’s capital markets business to a subsidiary of Stifel Financial Corporation (the “Sale Transaction”). Common Shareholders also voted overwhelmingly to approve the special resolution (the “Stated Capital Reduction Resolution”) authorizing a reduction of the stated capital of the Common Shares by $0.275 per Common Share (approximately $20.7 million in the aggregate) to permit a special distribution of equal amount to be paid to Common Shareholders, contingent upon the completion of the Sale Transaction.
At the Meeting, approximately 67.92% of the outstanding Common Shares were represented in person or by proxy. The voting results were as follows:
Each special resolution required approval by 66⅔% of the votes cast by Common Shareholders present in person or represented by proxy at the Meeting.
Commenting on the voting results, Don Wright, Chair of the Board of Directors of GMP said, “I am encouraged by the overwhelming shareholder support our resolutions received. Shareholders have delivered a strong vote of confidence in our strategy to divest the capital markets business to Stifel Financial Corp., a world class company, and shift our focus to opportunities in wealth management”.
“Discussions with clients and our investment professionals have been decidedly positive regarding the prospect and opportunities resulting from combining one of the best small-mid cap franchises in Canada with one of the exceptional small-mid cap franchises in the world. With this vote we are now busy preparing to transition our business and clients to Stifel”, said Harris Fricker, President and CEO of GMP Capital Inc.
The Sale Transaction is expected to close in the fourth quarter, conditional on receipt of necessary regulatory approvals and satisfaction of certain other closing conditions. Further information about the Sale Transaction is set forth in the Management Information Circular that was filed under the Company’s profile on SEDAR at www.sedar.com and is available on the Company’s website at gmpcapital.com
Focus on Accelerating Wealth Management
As detailed in the Management Information Circular, the Sale Transaction is the first step in a wider strategy to transform the Company into a pure-play wealth management firm that can provide Common Shareholders the greatest potential for long term value creation through ownership in a business that is focused exclusively on serving the wealth management needs of a growing number of investment advisors and their high and ultra-high net worth clients looking for independent, non-bank points of access for advice.
That strategy envisions the Company acquiring two-thirds of Richardson GMP Limited (“Richardson GMP”) not owned by GMP, in an all share transaction, and making wealth management the core business for future growth in the value of the Company. Richardson GMP is one of Canada’s leading wealth management firms. Since 2010, Richardson GMP has been awarded top ranking in the Investment Executive Brokerage Report Card for products and services dedicated to high net worth and ultra-high net worth investors. Most recently, Richardson GMP was recognized as one of Canada’s Best WorkplacesTM for 2019. Richardson GMP has approximately $29 billion in client assets (as at March 31, 2019) administered by 160 advisory teams. In 2018, Richardson generated approximately $290 million in revenues (with approximately 70% in fee based recurring revenues) and adjusted EBITDA of $45 million.
A Special Committee of the Board, comprised entirely of independent directors (excluding any directors affiliated with Richardson Financial Group Limited (“RFGL”)), has been formed to acquire the RFGL’s 33.3 percent interest in Richardson GMP as well as the remaining 33.3 percent held largely by Richardson GMP’s investment advisors, and management team. The Special Committee has retained RBC Capital Markets as financial advisor and as an independent valuator to prepare a formal valuation of the common shares of Richardson GMP in accordance with Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions.
The Company believes that acquiring the remaining two-thirds of Richardson GMP, with its proven and scalable wealth management platform, will allow it to:
● partner with the Richardson family, through RFGL (GMP’s largest shareholder (24.1%) and owner of approximately 33.3% of Richardson GMP), to bring to the Company a powerful brand, reputation/expertise and rich history in creating wealth in a variety of industries including financial services over more than five generations;
● accelerate its vision to continue building and growing a top-tier wealth management business that becomes a fully integrated financial services firm able to provide a comprehensive suite of client solutions across the entire family household balance sheet; and
● deploy its excess net working capital and public company currency to prudently and aggressively grow the business through recruitment of financial advisors, acquisition of complimentary wealth management businesses and capabilities, development and introduction of new product and service offerings and investing in a variety of operating and revenue initiatives to improve the service offering to investment advisors and their clients, and expand margins.
Any acquisition of 100% of Richardson GMP would be completed after the Sale Transaction, subject to approval of the Common Shareholders, required regulatory approvals and other customary closing conditions. Further, any such acquisition will be in accordance with the shareholders agreement governing Richardson GMP the details of which can be found in the Richardson GMP Liquidity Mechanism disclosed in the Company’s Annual Information Form dated February 2019. If completed, such acquisition will result in Richardson Financial Group Limited continuing to be the largest shareholder of GMP with its current holdings increasing by the amount received in GMP shares in exchange for its 33.3% interest in Richardson GMP.
There can be no assurance that any transaction involving Richardson GMP will be completed or on what terms or structure any transaction may occur.
To learn more about the Company’s transformation strategy going forward please click here.
About GMP Capital Inc.
GMP is a leading independent diversified financial services firm headquartered in Toronto, Canada, providing a wide range of financial products and services to a client base that includes corporate clients, institutional investors and high-net-worth individuals in two integrated reporting segments. The Capital Markets segment provides investment banking, including advisory and underwriting services, institutional sales and trading and research through offices in Canada, the United Kingdom, and the Bahamas. Wealth Management consists of GMP’s non-controlling ownership interest in Richardson GMP Limited. Richardson GMP Limited is one of Canada’s leading wealth management firms, 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, Director, Investor Relations
145 King Street West, Suite 300, Toronto, Ontario M5H 1J8
Tel: (416) 941-0894; Fax: (416) 943-6175 [email protected] or [email protected].
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Cautionary Note on Forward Looking Statements
This press release contains forward-looking statements within the meaning of Canadian securities laws. These forward-looking statements contain statements of intent, belief or current expectations of GMP. Forward-looking information is often, but not always identified by the use of words such as “anticipate”, “believe”, “expect”, “plan”, “intend”, “forecast”, “target”, “project”, “may”, “will”, “should”, “could”, “estimate”, “predict” or similar words suggesting future outcomes or language suggesting an outlook.
The forward-looking statements included in this press release, including statements regarding the Sale Transaction, the nature of GMP’s growth strategy going forward and execution on any of the potential plans are not guarantees of future results and involve 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 completion of the Sale Transaction, GMP has provided such in reliance on certain assumptions that it believes are reasonable at this time, including assumptions as to the closing of the Sale Transaction, the ability of the parties to receive, in a timely manner and on satisfactory terms, the necessary regulatory approvals and the ability of the parties to satisfy, in a timely manner, the other conditions to the closing of the Sale Transaction and the Company’s strategy going forward, including in respect of the Richardson GMP Limited business. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this news release.
Risks and uncertainties that may cause such differences include but are not limited to: the risk that the Sale Transaction may not be completed on a timely basis, if at all; the conditions to the consummation of the Sale Transaction may not be satisfied; the risk that the Sale Transaction may involve unexpected costs, liabilities or delays; the risk that, prior to the completion of the Sale Transaction, GMP’s business may experience significant disruptions, including loss of clients or employees, due to transaction related uncertainty or other factors; the possibility that legal proceedings may be instituted against GMP and/or others relating to the Sale Transaction and the outcome of such proceedings; the possible occurrence of an event, change or other circumstance that could result in termination of the Sale Transaction; risks related to the diversion of management’s attention from GMP’s ongoing business operations; risks relating to the failure to obtain necessary regulatory approvals; risks related to the Company’s strategy going forward, risks related to the failure to satisfy the conditions to complete the Sale Transaction; other risks inherent in the financial industry. Failure to obtain the requisite approvals, or the failure of the parties to otherwise satisfy the conditions to or complete the Sale Transaction, may result in the Sale Transaction not being completed on the proposed terms, or at all. In addition, if the Sale Transaction is not completed, and GMP continues in its current form, the announcement of the Sale Transaction and the dedication of substantial resources of GMP to the completion of the Sale Transaction could have a material adverse impact on GMP’s share price, its current business relationships (including with future and prospective employees, clients and partners) and on the current and future operations, financial condition and prospects of GMP and Richardson GMP Limited. When relying on forward-looking statements to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect GMP’s operations or financial results are included in reports on file with applicable securities regulatory authorities, including the management information circular, and may be accessed through the SEDAR website (www.sedar.com).
The forward-looking statements in this press release are made as of the date it was issued and GMP does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks that outcomes implied by forward-looking statements will not be achieved. GMP cautions readers not to place undue reliance on these statements.