TORONTO, ON. (October 15, 2020) – GMP Capital Inc. (GMP) (TSX: GMP) intends to release its third quarter 2020 financial results on Friday, November 6, 2020, at approximately 6:00 a.m. (EST).
THIRD QUARTER 2020 CONFERENCE CALL AND WEBCAST
A conference call and live audio webcast to discuss GMP’s third quarter results will be held that morning at 10:00 a.m. (EST). The call will be open to the public. Interested parties are invited to access the quarterly conference call on a listen-only basis by dialing 416-406-0743 or 1-800-898-3989 (toll free), followed by a participant password: 1144015#. The conference call will also be accessible that morning as a live audio webcast through the Investor Relations section of our website at https://www.gmpcapital.com/Investor-Relations/Quarterly-Information.
A recording of the conference call will be available until Sunday, December 6, 2020, by dialing 905-694-9451 or 1-800-408-3053 (toll free) and entering access code 6386356#. The webcast will be archived at https://www.gmpcapital.com/Investor-Relations/Quarterly-Information.
TORONTO, ON. (October 13, 2020) – GMP Capital Inc. (“GMP” or the “Company”) (TSX: GMP) announced today the commencement of its previously announced substantial issuer bid (“SIB”) under which the Company will purchase up to 16,528,926 of its outstanding common shares (“Common Shares”) at $2.42 per Common Share for an aggregate purchase price of approximately $40 million.
The SIB will expire at 5:00 p.m. (Eastern time) on November 18, 2020, unless extended or withdrawn by the Company. Other than customary conditions, the only condition for take-up will be the closing of the Company’s previously announced consolidation of 100% of the ownership of Richardson GMP Limited under GMP (the “RGMP Transaction”). The SIB is not conditional upon any minimum number of Common Shares being tendered.
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 directors and management of the Company have advised that they do not intend to tender shares under the SIB. Pursuant to the terms of a previously announced settlement agreement disclosed on September 28, 2020, Richardson Financial Group Limited, which based on publicly available information holds 18,170,575 Common Shares, has agreed to not to tender to the SIB. In addition, no Common Shares issued in connection with the RGMP Transaction will be permitted to be deposited under the SIB. As a result, the full $40 million will be available to minority GMP common shareholders.
Toronto, October 6, 2020 - GMP Capital Inc. (“GMP” or the “Company”) (TSX: GMP) is pleased to announce that with respect to its 2020 annual and special meeting of shareholders held earlier today (the “Meeting”), all of the resolutions were duly passed, including 95% of minority shareholders represented at the Meeting voting in favour of the RGMP Transaction and in excess of 94% FOR each of our director nominees.
Based on this overwhelming support, the Company can now move forward with its wealth management-focused growth strategy as the Company strives to make Richardson GMP (soon to be renamed Richardson Wealth and Patrimoine Richardson in the anglophone and francophone markets, respectively) the destination of choice for Canada’s top advisors, who share a similar entrepreneurial spirit, independent culture and philosophy to deliver unparalleled face-to-face advice to Canadians opting for non-bank points of access for holistic wealth management solutions. The Company currently expects the RGMP Transaction to be completed within the next 30 days, subject to customary closing conditions.
Don Wright, Chair of the board, stated, “Today’s vote is a powerful statement in support of our growth strategy and, equally as important, validates we have the right leadership, the best advisors and a powerful brand in place to execute our strategy to set GMP and Richardson Wealth on the best path to create long-term value for shareholders. We are also appreciative of Richardson Financial Group Limited’s unwavering commitment and continued support to the long-term success of GMP and Richardson Wealth, including agreeing to put their name on the door.”
Following the closing of the RGMP Transaction, the Company will have 164 investment advisory teams serving 32,000 clients out of 19 locations across Canada and approximately $29 billion in client assets under administration.
Toronto, September 30, 2020 - GMP Capital Inc. (“GMP” or the “Company”) (TSX: GMP) today announced that Institutional Shareholder Services Inc. ("ISS") and Glass Lewis & Co. ("Glass Lewis"), have each recommended that GMP shareholders vote FOR for all proposed resolutions at the Company’s October 6, 2020 annual and special meeting of common shareholders (the “Meeting”), including the amended transaction (the "RGMP Transaction") to consolidate 100% ownership of Richardson GMP Limited under GMP. As previously confirmed, the Meeting will be in a virtual only format.
In reaching its independent recommendation that shareholders vote FOR the RGMP Transaction Resolution, ISS noted, among other things, that:
“The rationale behind the RGMP Transaction appears sound as it will allow the restructured company to focus on the opportunities in the wealth management industry, which may offer the greatest potential for long-term value creation for shareholders.”
As part of its analysis, Glass Lewis stated the following: “The transaction agreement is also subject to approval by a majority of votes cast by GMP shareholders excluding RFGL and certain other related parties required to be excluded pursuant to applicable securities regulations. We believe this majority of the minority voting provisions serves an important role in protecting the interests of minority shareholders in related-party transactions. Overall, we find that the board appears to have taken appropriate steps to address potential conflicts and to represent the interests of independent GMP Shareholders.”
Furthermore, Glass Lewis' analysis stated that: “overall, we find that the proposed transaction appears strategically and financially reasonable to GMP and its shareholders. Based on these factors and the support of the board, we believe the proposed transaction is in the best interests of shareholders.”
If GMP shareholders have any questions or require assistance with voting your proxy, please 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 firstname.lastname@example.org.
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).
Toronto, September 28, 2020 - GMP Capital Inc. (“GMP” or the “Company”) (TSX: GMP) and Kevin Sullivan announced today that they and Richardson Financial Group Limited (“RFGL”) have reached an agreement (the “Settlement Agreement”) to amend the terms of the previously announced transaction (the “RGMP Transaction”) to consolidate 100% ownership of Richardson GMP Limited (“RGMP”) under GMP. Pursuant to the Settlement Agreement, Mr. Sullivan has agreed to vote in favour of the revised RGMP Transaction (as described below) as well as management’s slate of nominees to the board of directors of GMP at the annual and special meeting of the Company’s common shareholders (“GMP Common Shareholders”) to be held on October 6, 2020 (the “Meeting”). Mr. Sullivan has withdrawn his nomination of other directors.
- GMP will undertake a substantial issuer bid to return $40 million to minority GMP common shareholders instead of paying a $0.15 per share special dividend
- Kevin Sullivan agrees to support the revised terms of the RGMP Transaction and management’s slate of directors. Mr. Sullivan has withdrawn his slate of directors
Toronto, September 22, 2020 - GMP Capital Inc. (“GMP” or the “Company”) (TSX: GMP) today announced that it filed and is mailing another letter to common shareholders and has published a new Question and Answer document for common shareholders.
The letter is available on SEDAR and on the Company’s website at this link. The Q&A is appended to this news release and is available on the Company’s website at this link.
Both the letter and the Q&A respond to misguided criticism and miscalculations by a dissident. He promises more money to common shareholders of GMP, but he can’t deliver. To the contrary, there is significant risk that there will be less for everyone if common shareholders vote to support him.
At issue are the terms under which GMP proposes to increase its ownership of the wealth management company Richardson GMP Limited (“Richardson GMP”) to 100% from 33.2% through a share exchange (the “RGMP Transaction”). Your Board of Directors asks that you vote FOR the RGMP Transaction and FOR the Company’s nominees for election to the Board.
Toronto, September 17, 2020
- GMP Capital Inc. (“GMP” or the “Company”) (TSX: GMP) today responded to misguided comments from a dissident shareholder and reiterated the benefits of a proposed transaction that would see GMP increase its ownership of wealth management company Richardson GMP to 100% (from 33.2%) through a share exchange (the “RGMP Transaction”).
GMP urged common shareholders to end the uncertainty regarding the ownership of Richardson GMP by voting the BLUE proxy FOR the RGMP Transaction and FOR the Company’s nominees to the board.
“Don’t accept the dissident’s claim that he supports the concept of the RGMP Transaction, even as he opposes its terms,” said Donald Wright, chair of the GMP board and the independent special committee that negotiated the RGMP Transaction for the benefit of all GMP common shareholders. “The RGMP Transaction is inextricably linked to its fair and balanced terms. It is designed to drive long-term gains in shareholder value. Contrary to the dissident’s assertion, the GMP minority common shareholders and the other two parties were all treated fairly.”
“The dissident is wrong to demand a share buyback using funds that the board has designated for investment in growth. If the dissident blocks the RGMP Transaction, we as common shareholders will get neither a share buyback nor growth. Instead, we will face value destruction because Richardson GMP’s Investment Advisors may react to the ongoing uncertainty by departing for competitors.”
“Richardson Financial Group Limited (“RFGL”), a party to the RGMP Transaction negotiations, was entitled to cash for its equity in Richardson GMP but agreed to forego that entitlement if those funds would be used for growth. During very prolonged negotiations, RFGL stipulated that its funds should not be used merely for distribution to common shareholders. Be wary of any assertion by the dissident that he could successfully persuade RFGL otherwise.”
TORONTO, SEPTEMBER 15, 2020 – Richardson GMP Limited (“Richardson GMP” or the “Company”), a leading independent wealth management Company, announced today that Investment Advisors with approximately 97% of assets under administration support the terms of the previously announced transaction (the “RGMP Transaction”) under which 100% of the Company would be acquired by GMP Capital Inc. (“GMP”).
A list of Richardson GMP Investment Advisors, employees and leaders who have consented to have their names printed in support of the RGMP Transaction is provided at the end of this news release.
- Richardson GMP Investment Advisors, employees and leaders overwhelmingly support the RGMP Transaction
- Investment Advisors, the engine of future growth, will align their interests with GMP shareholders by owning 28.5% of GMP Capital on closing
Toronto, September 9, 2020 - GMP Capital Inc. (“GMP” or the “Company”) (TSX: GMP) today filed a Management Information Circular (the “Information Circular”) including a Letter to Common Shareholders (the “Letter”) outlining the clear benefits of the Company’s proposed transaction to acquire 100% of Canadian wealth-management leader Richardson GMP Limited (“Richardson GMP”), (the “RGMP Transaction”), as well as the significant risks to GMP’s ability to create long-term value for Common Shareholders should the RGMP Transaction not proceed.
• Supporting transaction and current board ensures GMP remains on best path to create long-term value — with the best advisors, a powerful brand and a well-capitalized balance sheet
• There are significant risks and costs to both GMP’s and Richardson GMP’s business if the Richardson GMP transaction does not proceed
• Shareholders should vote FOR the RGMP Transaction Resolution and FOR the Company’s slate of Board nominees
The Information Circular and Letter explain why the Board unanimously approved the RGMP Transaction and more importantly, why Common Shareholders should vote FOR both the RGMP Transaction and the Company’s slate of Board nominees. GMP believes the RGMP Transaction will best position the Company to capitalize on the considerable opportunities in the wealth management industry. The Company believes this offers the greatest potential for long-term value creation for GMP Common Shareholders.
The RGMP Transaction will result in GMP and its Common Shareholders owning 100% of a leading Canadian wealth management company that is well capitalized, national in scale, consistently profitable and has a strong proven brand. The combined entity will have the ability to grow quickly in the multi-trillion-dollar market for Canadian wealth management solutions and face-to-face advice.
“This transaction is the right one to protect and strengthen the three key pillars of the Richardson GMP wealth management business — the best advisors, a powerful brand and a well-capitalized balance sheet — and it will give GMP an unmatched foundation for future growth as an independent leader in a dynamic, fast-expanding industry,” said Donald Wright, chair of the GMP board and the independent special committee.
Added Marc Dalpé and Neil Bosch, Richardson GMP Investment Advisors and the investment advisor representatives on the Richardson GMP Board, “This transaction has our full support and that of an overwhelming number of our colleagues. Richardson GMP is a thriving independent firm and we as advisors believe that the transaction builds on our strengths – an unparalleled team, the resonance of our brand with clients and the resources that the firm can deploy to support growth.”
Andrew Marsh, President and CEO of Richardson GMP, “In just a decade, Richardson GMP has created an incredible franchise and become the destination of choice for clients and advisors who value independence. This evolution of the business sets it up for many more years of growth by building on the true partnership between our advisors, GMP and Richardson Financial Group Limited that underpins the success of Richardson GMP.”
Special Dividend Amount Provides Appropriate Balance
If Common Shareholders approve the RGMP Transaction and also approve a reduction of stated capital of the Company’s common shares, the Board intends to pay a special dividend of $0.15 per GMP common share to Common Shareholders of record (the “Special Dividend”) prior to the closing date, anticipated in the fourth quarter of 2020. This amount provides a balance between returning capital to Common Shareholders and retaining necessary capital in GMP to fund aggressively future growth initiatives for the benefit of all stakeholders.
The RGMP Transaction is the result of more than a year of arms-length negotiations by a special committee of independent GMP directors, and after having considered a number of alternatives, the RGMP Transaction was determined to be in the best interest of Common Shareholders. RBC Capital Markets has provided a valuation and fairness opinion to GMP's Board that the RGMP Transaction is fair, from a financial point of view, to the Company. Moreover, advisors representing approximately 97% of Richardson GMP’s assets under administration have indicated their support for the RGMP Transaction. This support by the advisors who are the engine of the Richardson GMP business is a testament to the merits of the RGMP Transaction.
The Information Circular and Letter explain why the Board disagrees with a dissident who has expressed opposition to the RGMP Transaction and has proposed a dissident slate of directors. In the Board’s view, any such attempts to stop or alter this beneficial transaction at this late stage, either directly or by changing the Board, puts at risk the future of GMP’s business and the ability of Richardson GMP to retain its investment advisors. The notion that a different board can renegotiate an alternative transaction is misguided and presents significant risks to all shareholders.
The Information Circular and Letter also explain why GMP’s proposed Special Dividend is sized appropriately. This is important because the dissident’s position boils down to a demand for a larger distribution. Common Shareholders are asked to keep in mind that the proposed Special Dividend would be the second paid to Common Shareholders in less than a year. Collectively, the two special dividends represent a payout of 76% of the proceeds received from the divestiture of GMP’s capital markets business last year.
The Information Circular and Letter are available in electronic form on SEDAR at www.sedar.com as well as on GMP’s web site at www.gmpcapital.com. The Information Circular and Letter, as well as a BLUE form of proxy, will be mailed to Common Shareholders of record as soon as possible.
GMP advises Common Shareholders to carefully read the Information Circular and Letter, which together provide shareholders with more information about the upcoming Board election and about the proposed transformative transaction involving Richardson GMP that was announced on August 13, 2020. An annual and special meeting to consider and vote upon the RGMP Transaction, the slate of Board nominees, among other items of business found in the Information Circular, is scheduled to take place on October 6, 2020.
The Board recommends that Common Shareholders read the Information Circular and Letter carefully and vote using the BLUE form of proxy:
• FOR the RGMP Transaction; and
• FOR the Company’s nominees for election to the Board.
The full text of the Letter follows:
Dear Common Shareholders,
Your Board of Directors asks that you vote FOR a transformational transaction to acquire 100% of Richardson GMP Limited (“Richardson GMP”) (the “RGMP Transaction”). Your vote will affect the value of your investment in GMP Capital Inc. (“GMP” or the “Company” or “we”) immediately and far into the future.
This transaction is the right one to protect and strengthen the three key pillars of the Richardson GMP wealth management business — the best advisors, a powerful brand and a well-capitalized balance sheet — and it will give GMP an unmatched foundation for future growth as an independent leader in a dynamic, fast-expanding industry.
In addition to the RGMP Transaction, your vote is requested on other matters, including the election of six Company nominees to GMP’s board of directors (the “Board”). GMP urges holders (the “Common Shareholders”) of the common shares of the Company (the “Common Shares”) to vote only on the BLUE form of proxy FOR the Company’s nominees to ensure that we remain on the best path to deliver long-term value creation.
Voting on both the RGMP Transaction and the election of management’s nominees to the Board is scheduled to take place at an annual and special meeting scheduled to be held on October 6, 2020 (the “Meeting”).
In this letter we summarize the compelling benefits of the RGMP Transaction and the significant risks should it not proceed. A complete analysis of these benefits and risks is provided in the accompanying management information circular (the “Information Circular”).
Please read the letter and the Information Circular carefully and then vote using the BLUE form of proxy:
• FOR the RGMP Transaction; and
• FOR the Company’s nominees for election to the Board.
The RGMP Transaction is in the Best Interest of the Company and All Common Shareholders
GMP believes the RGMP Transaction, which has been unanimously approved by the Board (with the interested directors nominated by Richardson Financial Group Limited (“RFGL”) recusing themselves from voting on the RGMP Transaction) and was recommended by a special committee of independent GMP directors (the “Special Committee”), is in the best interest of the Company and all Common Shareholders.
The RGMP Transaction was negotiated through an extensive, arms-length process by the Special Committee. RBC Capital Markets has provided a formal valuation and fairness opinion to the Board that the RGMP Transaction is fair, from a financial point of view, to the Company. Common Shareholders are urged to read the full text of the valuation and fairness opinion attached to the Information Circular.
You should be aware that a dissident, in an attempt to disrupt the RGMP Transaction, has notified the Company of his intention to propose an alternative slate of nominees for election to the Board. GMP believes the dissident shareholder is mistaken to assume that his alternate slate, if elected, will be able to renegotiate the terms of the RGMP Transaction.
The dissident’s position boils down to a demand for a larger distribution than our proposed special dividend (the “Special Dividend”). In this letter we explain why our Special Dividend is sized appropriately.
It is important to note that our proposed Special Dividend would be the second distribution paid to GMP Common Shareholders in less than a year. Collectively, the two special distributions represent the vast majority of the proceeds received from the divestiture of GMP’s capital markets business last year. We believe that the dissident's position is not in the best interest of the Company, nor the Common Shareholders.
Summary of the Benefits of the RGMP Transaction
The RGMP Transaction, as announced on August 13, 2020, will best position GMP to capitalize on the compelling opportunities in the wealth management industry as demand is expected to increase greatly in coming years for the top-tier wealth management services that Richardson GMP provides.
With approximately $4.4 trillion in retail financial wealth in Canada, which is expected to grow to $7.7 trillion by 2028 (Source: Investor Economics), the opportunity in the market for an independent, non-bank firm with national scale is significant. GMP believes that demographic trends driving a generational shift have created a growing degree of complexity and sophistication of wealth solutions, supporting the long-term value proposition of face-to-face advice.
Richardson GMP is a trophy asset in Canadian wealth management that generates attractive returns now and has tremendous potential. It has 165 highly qualified professional advisory teams serving over 32,000 high net worth families and businesses across Canada. With $28.3 billion of assets under administration as at June 30, 2020, Richardson GMP advisors have among the best practices in Canada with one of the highest assets under administration per advisory team. The firm is also recognized as one of Canada’s Best Workplaces™. For the six-months period ended June 30, 2020 and the year ended December 31, 2019, Richardson GMP had revenues of $132 million $272 million, respectively, and adjusted EBITDA of $20 million and $50 million, respectively.
The Company believes that acquiring 100% of Richardson GMP, an independent leader in the industry, offers the greatest potential for long-term value creation for Common Shareholders.
If the RGMP Transaction is approved, the Board intends to pay a Special Dividend of $0.15 per Common Share to holders of record prior to the closing date, anticipated in the fourth quarter of 2020. This approach strikes the right balance between returning capital to existing Common Shareholders and retaining necessary capital in GMP that we can use together with Richardson GMP’s consistent operating cash flow to fund future growth, service current indebtedness and preferred share obligations, and provide resilience in the current unprecedented and uncertain economic environment.
The RGMP Transaction also provides Common Shareholders with other significant benefits, consisting of ownership in a well-capitalized wealth management company with the ability to grow quickly and at relatively low risk by leveraging:
• The powerful Richardson brand; and
• The strong balance sheet to retain and aggressively recruit investment advisors using incentive payments in exchange for long-term employment commitments, bolstered by increased spend on wealth management solutions, marketing and technology investments to grow organically.
Advisors representing approximately 97% of Richardson GMP’s assets under administration have indicated their support for the RGMP Transaction by entering into non-binding acknowledgement and support letters. GMP believes this bodes well for growth. Richardson GMP’s investment advisors are the engines of the business. Their support is critical for future success and a well-capitalized business is essential to their commitment. Their endorsement is a testament to the merits and balance of the RGMP Transaction.
In short, the Company believes Common Shareholders will attain significant value as Richardson GMP drives to become the destination of choice for Canada's top advisors, who share Richardson GMP’s entrepreneurial spirit, independent culture and philosophy to deliver unparalleled face-to-face advice to Canadians opting for non-bank points of access for wealth management advice.
Extensive Arms-Length Negotiations Underpin the RGMP Transaction
The RGMP Transaction was conducted in accordance with the terms of the shareholders agreement governing Richardson GMP (the “RGMP Shareholders Agreement”) via arms-length negotiations over an extended period that began with the formation of an independent Special Committee in February 2019. The RGMP Shareholders Agreement, which GMP negotiated and entered into in 2009, governs the relationship between GMP and the other Richardson GMP shareholders, being RFGL and the advisors/employees.
The Special Committee was advised by independent legal counsel and financial advisors with deep backgrounds and expertise in such negotiations. The Special Committee also considered alternative transactions and determined that the RGMP Transaction is in the best interest of all stakeholders.
Discussions regarding the RGMP Transaction began in earnest in the autumn of 2019, continued over a period of many months, and were at times contentious. Details of the negotiations are described more fully in the Information Circular (see “Background to the RGMP Transaction”). Both the agreed upon price and the size of the Special Dividend were the result of this extensive process.
Details of the RGMP Transaction
If approved, the RGMP Transaction will result in GMP acquiring all of the common shares in Richardson GMP (the “RGMP Common Shares”) currently not owned by GMP at a fair price of:
• 1.875 Common Shares per RGMP Common Share after taking into account the proposed $0.15 Special Dividend. This price reflects a GMP share reference value that is an 88% premium to the 10-day VWAP for GMP shares as at August 13, 2020.
• This price, which on a pre-dividend basis equates to 1.76 GMP Common Shares per RGMP Common Share, compares favourably, from a GMP perspective, with the level of 2 Common Shares per RGMP Common Share contemplated in the non-binding term sheet that was announced in February 2020.
After giving effect to the RGMP Transaction, if completed, the Company will have an estimated 182.3 million Common Shares issued and outstanding, of which approximately:
• 40.1% would be held by RFGL, currently GMP's largest Common Shareholder with an aggregate ownership stake of approximately 24.1% of Common Shares immediately prior to the RGMP Transaction;
• 31.4% would be held by existing GMP Common Shareholders (other than RFGL); and
• 28.5% would be held by Richardson GMP investment advisors.
In order to become effective, the RGMP Transaction must be approved by a simple majority of the votes cast by Common Shareholders, excluding the votes attached to Common Shares held by RFGL and certain other related parties.
RFGL’s Significant Concessions
Contrary to the opinion expressed by the dissident, the RGMP Transaction does not unduly favour RFGL at the expense of other Common Shareholders. In fact, in the course of negotiations the Special Committee secured the following significant concessions from RFGL compared with what was mandated by the RGMP Shareholders Agreement:
• RFGL agreed to forego the immediate redemption of its $32 million of Richardson GMP preferred shares; and
• In addition to agreeing to a reference value that is an 88% premium on the Common Shares, RFGL accepted Common Shares in lieu of the $43 million cash portion of the purchase price to which RFGL was otherwise entitled.
Both of these concessions will assist GMP in retaining necessary capital to grow the business and facilitate the payment of the Special Dividend.
Ultimately, the RGMP Transaction consists of a carefully balanced and fair package of terms. You should be wary of any attempt by opponents of the RGMP Transaction to single out certain terms that they dislike while ignoring the overall balance that the Special Committee negotiated. You should be skeptical of claims that the dissident can negotiate better terms or distribute more capital to Common Shareholders.
We reiterate that the Board believes that the terms achieved are the best available, are fair, and will benefit all parties. No party obtained an undue advantage.
Summary of Risks if Common Shareholders Do Not Approve the RGMP Transaction
The Special Dividend described above will not be paid if the RGMP Transaction is not approved. While the Board will take actions that are in the best interest of the Company, GMP and Richardson GMP’s ability to generate profits and grow might be hampered because:
• GMP’s business would be left in limbo. Pursuant to the RGMP Shareholders Agreement, it is likely that there would be a contractual full-year deferral of negotiations between the parties for a new or revised transaction under the current terms of the RGMP Shareholders Agreement;
• Current and prospective Richardson GMP investment advisors and key employees of GMP and Richardson GMP are likely to be dissatisfied with the deferral and might succumb to inducements from aggressive recruitment efforts by competitors; and
• Third parties and clients with whom GMP and Richardson GMP currently do business or may do business in the future are likely to be unsettled by the deferral and might as a result turn to, or remain with, competitors.
The Downside Risk of a Larger Distribution
Following completion of the RGMP Transaction, GMP will have the working capital required to:
• Underpin the resilience of the business, including in the current unprecedented and uncertain economic environment;
• Provide the balance sheet strength necessary to recruit and retain investment advisors and wealth management clients;
• Position the business to invest in technology and marketing at a level appropriate for a national wealth manager;
• Explore potential acquisitions of like-minded high-quality wealth management businesses; and
• Add complementary asset management and insurance capabilities through acquisitions or alliances.
After extensive negotiations, as described in the Information Circular (See “Background to the RGMP Transaction”), the Board concluded that a Special Dividend of $0.15 per Common Share struck the right balance for an executable transaction.
As noted above, this would be the second special distribution paid to Common Shareholders in less than a year. The first, paid on December 31, 2019, amounted to $0.275 per Common Share. Combined, these special distributions total $0.425 per Common Share and represent a payout of 76% of the proceeds received from the 2019 divestiture of GMP’s capital markets business.
And yet, opponents will try to persuade you that GMP should deliver a still larger capital distribution, notwithstanding the downside risk. Don’t let them hamstring management’s ability to achieve its growth objectives.
Meeting and Voting Details
The Meeting is scheduled for October 6, 2020 at 10:00 a.m. (Prevailing Eastern Time).
As a result of the global health crisis, the Company had planned that the Meeting would be held in virtual format only. Having been notified on September 4, 2020 that the election of nominees to the Board will be contested, the Company is now considering a physical location for the Meeting and will advise shareholders of that location in due course.
Your vote is very important. Details of how you can vote and how you can attend the Meeting can be found under the subheading “Voting Information – Attending and Voting at the Meeting” in the Information Circular.
In addition to the RGMP Transaction and the election of directors, Common Shareholders will be asked to consider and vote at the Meeting upon the appointment of auditors, the change of the Company’s name, an advance notice by-law and a reduction in stated capital attributable to the Common Shares.
The Information Circular contains important information about each of the items of business to be dealt with at the Meeting. Please give this material your careful consideration and, if you require assistance, consult your financial, tax or other professional advisors, or 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@example.com.
On behalf of the Board, we would like to express our gratitude for the support our Common Shareholders, our investment advisor partners and our employees have demonstrated with respect to our decision to move ahead with the RGMP Transaction. We look forward to your continued support for what promises to be an excellent opportunity to create long-term value in a growing wealth management industry.
Chair of the Special Committee and Board
Board of Directors, GMP Capital Inc.