Toronto-based independent brokerage Richardson GMP Ltd. has secured a new $80-million bank credit facility that will allow the firm to refinance its long-term debt and return capital to a couple of its major shareholders.
One of the firm’s big shareholders, GMP Capital Inc., announced on Tuesday that it will receive approximately $28 million from Richardson GMP’s new bank financing — a four-year, $80-million credit facility with a syndicate of chartered banks.
According to GMP Capital, Richardson GMP will use of the proceeds of the financing to refinance its existing long-term debt. The firm will also redeem $45 million in class B preferred shares that will be allocated equally between GMP Capital and James Richardson & Sons Ltd., which each own about 32% of Richardson GMP. In addition, Richardson GMP will repay a $5 million loan facility to GMP Capital fully. As a result, GMP Capital expects to receive a total of approximately $28 million in cash.
“This new credit agreement is reflective of the evolution of Richardson GMP’s franchise and allows Richardson GMP to access more cost-effective and tax-efficient external funding, thereby increasing its financial flexibility,” says Harris Fricker, president and CEO of GMP, in a statement. “We are pleased to be receiving such a notable return of capital on our investment in Richardson GMP, which strengthens our net working capital position substantially.”
Following these transactions, which are subject to Investment Industry Regulatory Organization of Canada approval, GMP Capital’s and James Richardson & Sons’ equity stakes in Richardson GMP will remain unchanged.
“This transaction is a positive reflection of the evolution of Richardson GMP and its strong financial performance. Its stable cash flow generation should allow the company to continue returning capital to its shareholders,” Fricker notes. “GMP remains committed to working with our partners at Richardson GMP as they continue to grow the business and solidify their firm’s standing as a leading wealth management firm in Canada.”