GMP Capital, Richardson Financial Group, and Kevin Sullivan Announce Agreement to Amend Richardson GMP Consolidation Transaction

• 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 Sullivan has withdrawn his slate of directors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, Sept. 28, 2020 /CNW/ - 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 Sullivan has withdrawn his nomination of other directors.

Under the Settlement Agreement, the RGMP Transaction purchase agreement entered into in August 2020 (the "August Agreement") will be revised such that instead of a $0.15 per share special dividend being paid to existing GMP Common Shareholders, the Company will complete a substantial issuer bid ("SIB") to return $40 million to the GMP Common Shareholders.  The SIB will be commenced as soon as reasonably possible and, subject to the completion of the RGMP Transaction, will be completed, with all common shares required to be purchased thereunder taken up and paid for, no later than November 20, 2020.  RFGL has agreed not to participate in the SIB and no shares being issued under the RGMP Transaction will be entitled to participate in the SIB.  Accordingly, the full $40 million under the SIB will be available to the minority GMP Common Shareholders. 

Under the RGMP Transaction, GMP will acquire all of the common shares of RGMP that are not owned by the Company for a purchase price of 1.76 common shares of GMP for each common share of RGMP, which is the same exchange ratio (excluding the special dividend) provided for under the August Agreement.  The price per common share of GMP under the SIB will be $2.42 (being the reference price per GMP common share used to determine the exchange ratio under the August Agreement plus the amount of the $0.15 special dividend which will no longer be paid). 

Consistent with the Company's prior announcement, RFGL and GMP have re-confirmed, as part of the arrangements announced today, their commitment to ensure that at least a majority of the directors of GMP will remain independent, within the meaning of National Instrument 52-110 Audit Committees, of GMP and RFGL and each of their respective affiliates.  As previously announced, this provides all GMP Common Shareholders with the assurance of RFGL and GMP that, following the completion of the RGMP Transaction, future GMP boards will consist of a majority of directors that are independent of both GMP and RFGL. 

The other terms of the August Agreement remain unchanged.   

Donald Wright, Chair of the Board and of the Special Committee commented, "We are pleased to have reached a mutually acceptable agreement with RFGL and Mr. Sullivan.  The revised terms of the RGMP Transaction represent a fair and balanced solution in the best interests of GMP and all other parties allowing this important transaction to move forward.  We continue to believe that the best path forward is to consolidate the ownership of Richardson GMP and provide our investment advisor partners and our clients with certainty going forward.  We are focused on establishing our wealth platform at the forefront of the next generation of wealth and capitalizing on the considerable opportunities in the multi-trillion-dollar wealth management industry in Canada."

Andrew Marsh, President and CEO of RGMP stated, "I am pleased that we have reached this agreement, which reflects an important step forward for Richardson GMP and all our investment advisors. The most important thing for our team is to be able to move forward in leveraging this opportunity to aggressively grow our business and expand our client offering.  With this agreement, we are strongly positioned, and I thank all parties for reaching this constructive solution."

 "I am pleased to support the revised terms of the RGMP Transaction", stated Kevin Sullivan.  "I have always said that the RGMP Transaction is the right transaction for all parties concerned and I believe that, with the $40 million that will be paid to minority common shareholders of GMP through a share buy-back at $2.42 per share of GMP, it is a fair deal to GMP's minority shareholders.  I am also pleased that, as part of these arrangements, RFGL and GMP have re-iterated their commitment to maintain a majority of independent directors at GMP.   The terms announced today place GMP and RGMP in the best position to succeed.  Accordingly, I have agreed to vote in favour of the revised RGMP Transaction, management's slate of directors as well as all other resolutions being proposed by management at the Meeting.  I encourage all other shareholders to do likewise."

In addition to Mr. Sullivan's agreement to vote the approximately 4% of GMP's common shares owned by him in favour of the RGMP Transaction and other matters proposed by management for approval at the Meeting, each of James W. Davidson, John S. Chambers and Harris Fricker, who collectively own a further approximately 4.3% of GMP's common shares, have agreed, subject to certain conditions, to do likewise.

In light of the Settlement Agreement, Mr. Sullivan is no longer soliciting proxies in respect of the Meeting, and yellow proxies previously deposited in respect of the Meeting will be considered withdrawn and not be acted upon.   In light of the Settlement Agreement and the changes to the business to be conducted at the Meeting, any GMP Common Shareholder who previously submitted a yellow proxy must appoint a new proxyholder using the BLUE proxy in order for the holder's common shares to be voted by proxy at the Meeting.  Both the Company and Mr. Sullivan encourage all GMP Common Shareholders to vote using the BLUE proxy in favour of approving the RGMP Transaction and all other matters proposed by management for approval at the Meeting.

The Company and RFGL have agreed to enter into an amendment to the August Agreement reflecting the revised terms.

Pursuant to the Settlement Agreement, the Company has also agreed to reimburse Mr. Sullivan for reasonable expenses incurred by him in connection with his activities relating to the Meeting and the Settlement Agreement and Mr. Sullivan has agreed to customary standstill provisions.

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.

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].

SOURCE GMP Capital Inc.

GMP Capital Inc., Rocco Colella, Managing Director, Investor Relations, 145 King Street West, Suite 200, Toronto, Ontario M5H 1J8, Tel: [phone], [email protected] or [email protected]; Media contact: Longview Communications and Public Affairs, Boyd Erman [phone]; [email protected], Alan Bayless [phone], [email protected]

Related Links

http://gmpcapital.com/