Calling its former president and CEO a misguided dissident, GMP Capital Inc. issued a statement Sept. 17, encouraging shareholders to ignore a recent information circular filed by former president and CEO, Kevin Sullivan, calling for shareholders to reject the proposed Richardson GMP transaction, and instead vote for a new board of directors to lead the company in the future.
In the war of words, each side is accusing the other of destroying value.
Without naming Sullivan directly, the company says “the dissident is wrong to demand a share buyback using funds that the board has designated for investment growth,” they write. “Instead we will face value destruction because Richardson GMP’s investment advisors may react to the ongoing uncertainty by departing for competitors.” The company also claims that the majority of Richardson GMP investment advisors have indicated their support for the terms of the transaction that would see Richardson Financial Group Limited assume ownership of 40.1 per cent of GMP’s shares.
“GMP’s strategy is to deploy capital toward the aggressive recruitment of high-quality investment advisory teams,” they add. The company also claims Sullivan’s plan would concentrate GMPs remaining equity, making it difficult to create demand for the stock. “Limited growth prospects, combined with limited liquidity would weaken the share price and make it even more difficult to retain investment advisors.”
In his own letter to shareholders, Sullivan says “GMP's circular includes claims regarding the potential fallout from a decision by the Independent GMP Shareholders to reject the RGMP Transaction,” he writes. “None of these claims should be believed by shareholders, who should disregard these scare tactics. Shareholders should instead be concerned about a board that engages in them.”
