TORONTO, Dec. 6, 2019 /CNW/ - GMP Capital Inc. (GMP or the Company) (TSX: GMP) announced today that it has completed the sale of substantially all of its capital markets business to Stifel Financial Corp. (Stifel or the Purchasers) as previously announced on June 17, 2019 (the Sale Transaction).
Cash consideration paid by Stifel was comprised of the net tangible book value of the purchased business, at time of closing, plus a premium of $40 million. Pursuant to the terms of the asset purchase agreement entered into between GMP and Stifel, the premium was subject to a $5 million reduction resulting from certain specified adjustments prior to closing.
"The successful closing of the Sale Transaction significantly advances our efforts to transform GMP into a pure-play, publicly traded wealth management company, as the demand for face-to-face advice continues to grow," said Kish Kapoor, Interim President and Chief Executive Office. "The next phase includes pursuing significant opportunities in wealth management and continuing discussions with Richardson Financial Group Limited with a view to consolidate 100% of ownership in Richardson GMP into GMP."
Immediately following the closing of the Sale Transaction, GMP's assets are comprised of its 34.4% ownership interest in Richardson GMP Limited (Richardson GMP), $31.1 million in preferred share investments in Richardson GMP and net working capital in the range of $156 - $166 million (prior to the payment of return of capital and allowance for transaction related costs and operating losses up to date of closing). GMP will continue to provide carrying broker services to Richardson GMP and Stifel Canada under the name of RF Securities Clearing LP.
For more information regarding the Richardson GMP business, please see the "Supplemental Information" section at the end of this press release.
RETURN OF CAPITAL DISTRIBUTION
GMP's board of directors declared a one-time return of capital distribution in the amount of $0.275 per common share, payable on December 31, 2019, to common shareholders of record on December 16, 2019. The one-time return of capital distribution was approved at a special meeting of common shareholders held on August 6, 2019.
CHANGE TO BOARD OF DIRECTORS
Concurrent with the closing of the Sale Transaction, the board of directors announced the resignation of Harris Fricker, former President and CEO, of GMP Securities L.P., as a director. Following today's announcement, GMP Capital Inc.'s board will be comprised of eight directors.
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 statements included in this press release, including statements regarding the consolidation of 100% of the ownership in Richardson GMP, the nature of GMP's growth strategy going forward and execution on any of its potential plans and the Company's net working capital position 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 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 that a transaction involving Richardson GMP can be completed on acceptable terms and that any conditions precedent can be satisfied. There is no assurance that any transaction involving Richardson GMP will result from the discussions with Richardson Financial Group Limited or on what terms or structure any transaction may occur as proposed or at all, including the timing of the completion of any transaction involving Richardson GMP. 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: Failure of the parties to enter into a transaction involving Richardson GMP on satisfactory terms, or at all; failure of the parties to satisfy any regulatory approval, conditions precedent or to otherwise complete the consolidation of 100% ownership in Richardson GMP may result in the consolidation of 100% ownership in Richardson GMP not being completed on the proposed terms, or at all; the risk that the consolidation of 100% ownership in Richardson GMP may involve unexpected costs, liabilities or delays; the risk that, prior to the completion of the consolidation of 100% ownership in Richardson GMP, 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; the possibility that legal proceedings may be instituted against GMP and/or others and the outcome of such proceedings; risks related to the diversion of management's attention from GMP's ongoing business operations. If the consolidation of Richardson GMP is not completed, and GMP continues in its current form, the dedication of substantial resources of GMP to the completion of the consolidation of 100% ownership in Richardson GMP 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. In addition, GMP may incur transaction and restructuring costs and has agreed to indemnify Stifel in certain circumstances and to satisfy certain pre-closing liabilities which, in addition to other factors, may result in the Company's working capital position to be lower than anticipated.
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 and may be accessed through the SEDAR website (www.sedar.com). For a description of additional risks that could cause our actual results to differ materially from our current expectations, see "Risk Management" and "Risk Factors" in the Third Quarter 2019 MD&A; "Risk Factors" in GMP's AIF and "Risk Factors" in GMP's management information circular dated July 8, 2019. These risks and uncertainties are not the only ones facing the GMP Group. Additional risks and uncertainties not currently known to us or that we currently consider immaterial, may also impair the operations of the GMP Group. Although forward-looking information contained in this press release is based upon what management believes are reasonable assumptions, there can be no assurance that actual results will be consistent with this forward-looking information. 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. 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 of Directors 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 will continue to provide carrying broker services to Richardson GMP and will provide carrying broker services to Stifel's Canadian capital markets business, 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 firm, 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.
SUPPLEMENTAL INFORMATION - RICHARDSON GMP
The following supplemental information reflects how management of Richardson GMP assesses the financial performance of Richardson GMP. Richardson GMP's management assesses performance on both a reported and an adjusted basis and considers both bases to be useful in assessing underlying, ongoing business performance. Presenting results on both bases also permits readers to assess the impact of specified items on financial results. Richardson GMP's management uses certain measures to assess the financial performance of Richardson GMP that are not GAAP measures under IFRS. EBITDA and adjusted EBITDA do not have any standardized meaning prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by other issuers. These Non-GAAP measures should not be considered as alternatives to net income or comparable metrics determined in accordance with IFRS as indicators of Richardson GMP's performance, liquidity, cash flows and profitability. Richardson GMP's management believes adjusting results by excluding the impact of the specified items is more reflective of ongoing financial performance and cash generating capabilities and provides readers with an enhanced understanding of how management views Richardson GMP's core performance.
For further information, refer to the "Supplemental Information" section in the Company's publicly filed MD&A for the nine months ended September 30, 2019.
The following table sets forth an overview of the unaudited interim condensed consolidated financial statements of Richardson GMP for and as at the nine months ended September 30, 2019 and the audited consolidated financial statements of Richardson GMP for the year ended and as at December 31, 2018, on a 100% basis; noting, however, that GMP owns an approximate 34.4% non-controlling interest of Richardson GMP as at September 30, 2019.
The following table shows the consolidated financial results of Richardson GMP for the periods indicated.
($000, except as otherwise noted)
Nine Months Ended
Employee compensation and benefits
Income before income tax
Net income ? reported
Pre-tax impact of adjusting items
Depreciation and amortization
Transition assistance loan amortization
Number of advisory teams
AUA at period-end ($ millions)
Considered to be a non-GAAP financial measure. This measure does not have any standardized meaning prescribed by GAAP under IFRS and is therefore unlikely to be comparable to similar measures presented by other issuers.
The following table shows the consolidated balance sheets of Richardson GMP for the periods indicated.
($000, except as otherwise noted)
As at September 30,
Cash and cash equivalents
Due from carrying broker
Deposits with carrying brokers
Equipment and leasehold improvements, net
Right of use asset
Advisor loans receivable
Future tax asset
Goodwill and intangible assets
Liabilities and Shareholders' Equity
Accounts payable and accrued liabilities
Due to issuer/broker
Total liabilities and equity
SOURCE GMP Capital Inc.
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