Sullivan and GMP settle on Richardson GMP transaction

Following weeks of feuding between GMP Capital Inc. and its former CEO, Kevin Sullivan, both parties announced suddenly that they have reached an agreement among themselves and Richardson Financial Group Limited, to amend the terms of the previously announced transaction to consolidate 100 per cent ownership of Richardson GMP Limited under GMP.

Pursuant to the settlement agreement, Sullivan has agreed to vote in favour of the revised transaction, and has withdrawn his nomination of new directors to the company’s board of directors.

According to the joint statement released by Sullivan and GMP, the transaction agreement the company entered into in August 2020 will be revised such that the company will complete a substantial issuer bid (SIB) to return $40-million to GMP’s common shareholders, instead of paying a $0.15 per share special dividend. The price per common share of GMP under the SIB will be $2.42. The company says the SIB will be commenced as soon as reasonably possible, subject to the transaction’s completion. The common shares will be paid for no later than Nov. 20, 2020.

Under the Richardson GMP transaction, GMP will acquire all common shares of the company that are not owned by GMP, for a purchase price of 1.76 common shares of GMP for each share of Richardson GMP. Richardson Financial Group has agreed not to participate in the SIB and no shares being issued under the transaction will be entitled to participate in the SIB. In addition, the two companies reconfirmed their commitment to ensure that at least a majority of the directors of GMP will remain independent of GMP and Richardson Financial Group.

“I am pleased to support the revised terms of the RGMP transaction,” Sullivan stated. “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, Richardson Financial Group Limited and GMP have reiterated their commitment to maintain a majority of independent directors at GMP. The terms announced today place GMP and Richardson GMP in the best position to succeed. Accordingly, I have agreed to vote in favour of the 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.”