6. What are the risks of putting Richardson GMP up for sale?
Richardson GMP’s IAs have told us that they would be better off accepting individual recruitment offers from competitors, compared with participating in the sale of Richardson GMP. They have also advised us that they prefer the RGMP Transaction over any other alternative because they believe the strong balance sheet would accelerate profitable growth.
There is also no guarantee that a sale would result in more money for GMP shareholders after taking into account tax consequences and the repayment of the outstanding GMP preferred shares if GMP were to be wound up after the sale. The value of Richardson GMP was independently determined by RBC Capital Markets in its valuation. There is no guarantee that a sale in the context of a forced process would lead to a third party paying a higher price.
7. What board governance protections will minority shareholders have following closing of the RGMP Transaction?
Minority shareholders will be protected. GMP, with the agreement of Richardson Financial Group Limited, has confirmed its commitment to ensure that a majority of the Board will be independent including being independent from RFGL. That commitment is further described in GMP’s news release dated September 22, 2020.
8. Doesn’t the GMP incumbent Board, which includes two Richardson Financial Group Limited nominees, breach the terms of the Richardson GMP Investor Agreement?
No. The Investor Agreement provides that Richardson Financial Group Limited is entitled to two nominees so long it holds more than 10% of the shares of GMP – as it does now and will continue to do at the closing of the RGMP Transaction. The only situation where that entitlement would decrease is if Richardson Financial Group Limited was the party to cause the size of the Board to decrease. When GMP sold its Capital Markets business, the GMP three directors connected with that business stepped down or joined one of our competitors. That was not a situation that required a reduction in Richardson Financial Group Limited’s representation on the GMP Board. GMP, with the agreement of Richardson Financial Group Limited, confirmed its commitment to ensure that a majority of the Board will be independent including being independent from RFGL. That commitment is further described in GMP’s news release dated September 22, 2020.