May 5, 2015 - GMP, RFGL and RGMP Announce Richardson GMP Shareholder Liquidity and Investor Agreement Amendments

TORONTO, May 5, 2015 – GMP Capital Inc. (GMP) (TSX: GMP), Richardson Financial Group Limited (RFGL), a subsidiary of James Richardson & Sons, Limited (JRSL), and Richardson GMP Limited today jointly announced that they have entered into an agreement to formalize the amendments to the Richardson GMP Limited’s (Richardson GMP) shareholders’ agreement (Shareholders Agreement) regarding changes to the Richardson GMP shareholder liquidity mechanism (Richardson GMP Liquidity Mechanism) as previously announced on January 13, 2013.

The material aspects of the original Richardson GMP Liquidity Mechanism are summarized in GMPs annual information form dated March 5, 2015.  GMP and RFGL each own approximately 30% per cent of the issued and outstanding common shares of Richardson GMP, with the balance being held by Richardson GMP’s investment advisory and management teams.

GMP and RFGL also announced that they entered into an agreement regarding changes to the Investor Agreement dated as of November 12, 2009 between GMP, JRSL and Richardson Financial Group Limited (Investor Agreement).  

Below is a summary of certain provisions of the amended Richardson GMP Liquidity Mechanism and the amendments to the Investor Agreement.

 Amended Richardson GMP Liquidity Mechanism

The Richardson GMP Liquidity Mechanism can be initiated at any time on or prior to November 15, 2016 with the unanimous agreement of GMP, RFGL and the investment advisor director nominees or at any time after November 15, 2016 unilaterally by any one of GMP, or RFGL or both of the investment advisor director nominees.  No party is under any obligation to initiate the Richardson GMP Liquidity Mechanism at any time.

For a period following the commencement of the liquidity process, GMP and RFGL will negotiate for the acquisition by GMP of all of the common shares of Richardson GMP that are not owned by GMP and its subsidiaries (a GMP Acquisition).

If, at the end of the negotiation period, GMP and RFGL have not entered into a definitive agreement in respect of a GMP Acquisition, GMP will deliver an offer to RFGL for a GMP Acquisition.  The Shareholders Agreement requires that the consideration to be paid for any GMP Acquisition shall consist entirely of common shares of GMP (Common Shares), subject to certain exceptions and constraints including but not limited to a requirement for GMP to pay such portion of the consideration in cash as is required to ensure that the issuance of Common Shares as consideration for any GMP Acquisition shall not result in RFGL and its affiliates owning in the aggregate more than 331/3% of the outstanding Common Shares (calculated in accordance with the Shareholders Agreement).

Following receipt of the GMP offer, RFGL may, among other things, (a) accept GMP’s offer, (b) make a counter-offer to GMP (i.e., indicate a new price at which RFGL (and the other Richardson GMP shareholders) would sell pursuant to a GMP Acquisition), or (c) make an offer to GMP to purchase all of the common shares of Richardson GMP owned by GMP and its subsidiaries (a RFGL Acquisition).

If RFGL accepts GMP’s offer, the parties will proceed to complete the transaction subject to the satisfaction of applicable conditions including, if required, the approval of the shareholders of GMP or a subset thereof. 

If RFGL makes a counter-offer to GMP for a GMP Acquisition or an offer to GMP for a RFGL Acquisition, then GMP can, among other things, (a) accept the counter-offer or offer, as applicable, or (b) reject the counter-offer or offer, as applicable.

If GMP accepts the counter-offer or offer, as applicable, the parties will proceed to complete the transaction subject to the satisfaction of applicable conditions including, if required, the approval of the shareholders of GMP or a subset thereof.  If GMP rejects the RFGL counter-offer or offer, as applicable, Richardson GMP may be marketed to third parties. 

If RFGL makes a counter-offer for a GMP Acquisition that is not accepted by GMP, RFGL may undertake the marketing process for the sale of all of the common shares of Richardson GMP.  If the marketing process is successful in obtaining a third party offer that meets certain specified conditions with respect to price, timing and other terms, then the sale to the third party will be completed (subject to the satisfaction of applicable conditions).  If the process is not successful, then GMP will complete the purchase of Richardson GMP pursuant to the terms of its initial offer, except that the price will be at a specified discount to the initial offer. 

If RFGL makes an offer for a RFGL Acquisition that is not accepted by GMP, GMP may undertake the marketing process for the sale of all of the common shares of Richardson GMP.  If the marketing process is successful in obtaining a third party offer that meets certain specified conditions with respect to price, timing and other terms, then the sale to the third party will be completed (subject to the satisfaction of applicable conditions).  If the process is not successful, then RFGL will complete the purchase of all of common shares of Richardson GMP owned by GMP and its subsidiaries pursuant to the terms of its offer, except that the price will be at a specified discount to the RFGL offer.

Amendments to Investor Agreement

Under the amended Investor Agreement, JRSL and its subsidiaries are restricted from selling any of the Common Shares arising from the combination of the private wealth management businesses of GMP and JRSL on November 12, 2009 until the earlier of a sale of Richardson GMP pursuant to the Richardson GMP Liquidity Mechanism or the completion of certain other fundamental transactions involving GMP or Richardson GMP.  The amendments to the Investor Agreement expand the circumstances in which the sale restrictions applicable to JRSL will terminate.

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, as well as statements regarding the RGMP Liquidity Mechanism. 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.

Forward-looking information is not a guarantee of future performance and is subject to numerous risks and uncertainties, including those described in this press release. The RGMP Liquidity Mechanism is subject to various risks and uncertainties, including that the conditions to closing will not be satisfied or waived or that the transactions will otherwise not be consummated. GMP's and Richardson GMP’s primary business activities are both competitive and subject to various risks. These risks include market, credit, liquidity, operational and legal and regulatory risks and other risk factors including, without limitation: variation in the market value of securities, volatility and liquidity of equity and fixed income trading markets, volume of new financings and mergers and acquisitions, dependence on key personnel and sustainability of fees. Other factors, such as general economic conditions, including interest rate and exchange rate fluctuations, may also have an effect on GMP's results of operations. Many of these risks and uncertainties can affect GMP's actual results and could cause its actual results to differ materially from those expressed or implied in any forward-looking information disclosed by management or on its behalf. For a description of additional risks that could cause our actual results to materially differ from our current expectations, see "Risk Management" and "Risk Factors" in the First Quarter 2015 MD&A and "Risk Factors" in GMP's annual information form. These risks and uncertainties are not the only ones facing GMP together with its consolidated operations controlled by it and its predecessors (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. Material assumptions or factors underlying the forward-looking information contained in this press release include, but are not limited to, "Business Environment and Outlook", "First Quarter 2015 Financial Highlights", "Segment Results ", "Liquidity and Capital Resources" sections of the First Quarter 2015 MD&A. 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 or Richardson GMP’s views as of any date subsequent to the date of this press release. Except as required by applicable law, management and GMP's Board of Directors, and management of Richardson GMP and its 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 is a leading independent diversified financial services firm headquartered in Toronto, Canada, providing a wide range of financial products and services to a global 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 located in Toronto, Montreal, Calgary, New York, Houston, Stamford, Miami, Dallas, London, Perth, Sydney, Hong Kong and Beijing. Wealth Management consists of GMP's non-controlling ownership interest in Richardson GMP Limited and CQI Capital Management L.P., an asset management firm. Richardson GMP Limited, 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.

 

ABOUT RICHARDSON FINANCIAL GROUP LIMITED

Richardson Financial Group Limited is a subsidiary of James Richardson & Sons, Limited, a privately-owned Canadian corporation headquartered in Winnipeg.  Richardson Financial Group Limited is involved in the financial services industry in Canada through its shareholdings in GMP Limited, an entrepreneurial independent investment dealer, and Richardson GMP Limited, an independent leading edge wealth management firm.

ABOUT RICHARDSON GMP LIMITED

As Canada's largest independent wealth management firm with offices across Canada, Richardson GMP provides exclusive and innovative investment solutions to successful families and entrepreneurs. Since 2010, Richardson GMP has earned top ranking in the Investment Executive Brokerage Report Card for products and services dedicated to high net worth investors. Richardson GMP Limited is a member of the Investment Industry Regulatory Organization of Canada the Canadian Investor Protection Fund. For further information, please visit www.RichardsonGMP.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
rcolella@gmpcapital.com or investorrelations@gmpcapital.com




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