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GMP Capital Inc. will pay out $40 million to shareholders to end a dispute over its deal with Richardson Financial Group that would consolidate ownership of Richardson GMP.

Instead of the $0.15 per share special dividend for shareholders outlined in the transaction terms announced last month, GMP Capital has reached an agreement with former executive Kevin Sullivan to complete a share buyback that will return $40 million to shareholders.

Sullivan, a GMP founder and former CEO who owns about 4% of GMP Capital common shares, came out against the deal earlier this month. He proposed new terms and new directors for election on Oct. 6, when the vote on the transaction will take place.

Sullivan’s terms included $40 million returned to shareholders in addition to the special dividend. In agreeing to the new terms, he withdrew his proposed slate of directors.

“I have always said that the Richardson GMP 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,” Sullivan said in a statement.

Other former executives — including former GMP Capital CEO Harris Fricker — who own roughly 4.3% of GMP shares will also support the new agreement.

The share buyback is expected to take place by the end of November.

Under the new transaction terms, GMP will acquire all the shares of Richardson GMP it doesn’t already own for 1.76 common shares of GMP for each common share of Richardson GMP. This is the same exchange ratio, excluding the special dividend, provided for under last month’s agreement, the firm said in a release.

Richardson GMP president and CEO Andrew Marsh said the agreement is an important step for the firm’s 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,” Marsh said in a statement. “With this agreement, we are strongly positioned, and I thank all parties for reaching this constructive solution.”

The terms announced in August would have given Richardson Financial Group an estimated aggregate ownership position of approximately 40%; existing GMP Capital shareholders (other than Richardson Financial Group) 31.4%; and Richardson GMP advisors  28.5%.

Under the new agreement, Richardson Financial Group would own approximately 43.8% of shares, compared to 30.7% for Richardson GMP advisors and 25.6% for existing GMP Capital shareholders.

Following the transaction, a majority of GMP’s directors will be independent of both GMP and Richardson Financial Group, the release said.

“I am also pleased that, as part of these arrangements, Richardson Financial Group and GMP have re-iterated their commitment to maintain a majority of independent directors at GMP,” Sullivan said.

The deal was first agreed to in February only to be revised in August based on a revaluation of Richardson GMP at $420 million, compared with $500 million under the February deal.

The new agreement will reduce the cash available for recruitment and other growth initiatives by approximately $29 million, the firm said in a Sept. 30 release, from a previously anticipated level of approximately $60 million.

“The reduction will in turn limit recruitment, subject to the company finding other sources of capital,” it said.

This article was updated on Sept. 30 with new ownership breakdown figures and information about available cash.