GMP Capital Inc. (TSX: GMP), Richardson Financial Group Ltd. and Richardson GMP Ltd. have reached an agreement in principle regarding changes to the Richardson GMP Ltd. shareholder liquidity event.
The three firms jointly announced the agreement Thursday evening.
Toronto-based GMP Capital and Winnipeg-base Richardson Financial each own approximately 32.6% of Toronto-based Richardson GMP, with the balance being held by Richardson GMP’s investment advisory and management teams.
In 2012, after extensive consultations among Richardson GMP shareholders, a special committee representing investment advisors across the firm was created to help explore and negotiate changes to the shareholder liquidity event arrangements.
Prior to these amendments, GMP Capital would have been required to deliver an offer to purchase Richardson GMP and initiate the shareholder liquidity mechanism on the date which is no later than the earlier of Nov. 12, 2014, and the date that the assets under administration of Richardson GMP exceed $30 billion.
Going forward, the six-member board of directors of Richardson GMP, by special majority vote (which must include the approval of at least one nominee from each of GMP Capital and Richardson Financial in addition to both investment advisor nominees), now has the right to determine the timing under which GMP Capital will be required to deliver an offer to purchase Richardson GMP and trigger the liquidity mechanism.
In the event that a special majority vote has not been achieved prior to November 2016, any one of GMP Capital, Richardson Financial and the investment advisors, as represented by the nominees on the board of directors of Richardson GMP, may initiate the shareholder liquidity mechanism.
Richardson GMP will also implement an internal liquidity process, for as long as it remains a private company, designed to provide voluntary liquidity to investment advisor shareholders of Richardson GMP beginning December 2013.
“Richardson GMP is clearly a successful wealth management entity with both sustainability and scale. As the business evolved, it became obvious to the three stakeholder groups that we would be better served to move from a liquidity process ruled primarily by the calendar to one driven by consensus,” said Harris Fricker, president and CEO of GMP, in a release.
“We continue to view Richardson GMP as a valued business partner and the wealth management business as a key growth component for our firm,” he added.
“The new liquidity event structure has been created with valuable input from our advisor partners and provides more control for our future as we continue building on our success and providing unparalleled service to our clients,” said Andrew Marsh, president and CEO of Richardson GMP.