Toronto, October 20, 2020 – GMP Capital Inc. (“GMP” or the “Company”) (TSX: GMP) announced today that it has completed the Company’s previously announced transaction (the “RGMP Transaction”) to consolidate 100% ownership of Richardson GMP Limited (“RGMP”) under GMP. With immediate effect at closing, GMP’s board of directors (the “Board”) appointed Kish Kapoor as President and Chief Executive Officer, removing his interim title. Mr. Kapoor was named Interim President and Chief Executive Officer in August 2019 and was given a mandate to complete the sale of the Company’s former capital markets business and prepare the Company for the RGMP Transaction.
- Creates a wealth management-focused company with national scale, a proven brand, the best advisors and a strong balance sheet
- Announces name change and stock ticker symbol change to RF Capital Group Inc. (TSX: RCG)
- GMP’s board of directors approved resumption of quarterly preferred share dividend, including payment of accrued and unpaid dividends
Under the RGMP Transaction, GMP acquired all the common shares of RGMP that were not owned by the Company for a purchase price of 1.76 common shares of GMP (“Common Shares”) for each common share of RGMP. In consideration, GMP issued 100,517,533 Common Shares to former RGMP shareholders at closing (the “Issuance”), 10% of the Issuance being freely tradeable shortly after closing and the remaining 90% will be held in escrow to be released in equal amounts on the first three anniversaries following closing. After giving effect to the RGMP Transaction, the Company has 175,909,049 Common Shares issued and outstanding as at October 20, 2020.
As previously announced on October 13, 2020, GMP commenced its substantial issuer bid (“SIB”) under which the Company will purchase up to 16,528,926 of its outstanding Common Shares at $2.42 per Common Share for an aggregate purchase price of approximately $40 million. If more than 16,528,926 Common Shares are validly deposited under the SIB, then the deposited Common Shares will be purchased on a pro rata basis according to the total number of Common Shares validly deposited under the SIB (subject to certain exceptions for “odd lot” holders).
The table below shows the percentage ownership for all three of GMP’s common shareholder groups following the closing of the RGMP Transaction and the completion of the SIB:
“This milestone was several years in the making and marks an exciting new era at both GMP and Richardson GMP,” said Kish Kapoor, President and Chief Executive Officer, GMP Capital Inc. “Having received a clear mandate from our shareholders, we will now shift our attention and resources exclusively on becoming a dominant leader in the wealth management industry.”
Added Kapoor “Our growth strategy includes aggressively recruiting advisors, acquiring wealth management firms and more importantly, helping our highly valued investment advisor partners enjoy even more success in serving high net worth clients across Canada. They own almost a third of our company, are responsible for majority of our revenues and represent a key competitive advantage in a growing wealth management industry. With their continued help, endorsement and support of our powerful brand, we are confident that we can become the destination of choice for Canada’s top investment advisors and their clients who want non-bank points of access for wealth management solutions.”
Shortly following closing, GMP will be re-named RF Capital Group Inc., and Richardson GMP will be re-named Richardson Wealth and Partrimoine Richardson in the anglophone and francophone markets, respectively. RF Capital Group Inc. will remain listed on the Toronto Stock Exchange and will commence trading under the symbol “RCG” by late November.
Effective October 20, 2020, following the completion of the RGMP Transaction, the Board approved the resumption of the Company’s quarterly dividend on its preferred shares commencing with the payment of accrued but unpaid dividends of $0.2257 per Cumulative 5-Year Rate Reset Preferred Share, Series B, and $0.193803 per Cumulative Floating Rate Preferred Shares, Series C, payable on November 16, 2020, to preferred shareholders of record on October 30, 2020.
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. 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: the risk that the RGMP Transaction may involve unexpected costs or liabilities; 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 of the Company dated September 8, 2020 (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.
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