GMP Capital Inc announced it has entered into a definitive purchase agreement  with Richardson Financial Group Limited ("RFGL") to consolidate 100% ownership of RGMP under GMP (the "RGMP Transaction"). Pursuant to the RGMP Transaction, GMP will acquire all of the common shares of Richardson GMP (or "RGMP") that are not owned by the Company for a purchase price of 1.875 common shares (1.76 common shares pre-dividend) of GMP (the "Common Shares") per common share of RGMP ("RGMP Common Share"). The announcement is the culmination of the negotiation period undertaken pursuant to the terms of the RGMP Shareholders' Agreement that commenced with the February 26, 2020 announcement of the signing of a non-binding term sheet by the Company and RFGL, and was extended on April 14, 2020 due to the global health crisis. The signing of the Purchase Agreement followed consultation with the RGMP investment advisors, the receipt of an updated formal valuation prepared by RBC Capital Markets ("RBC") and the recommendation of the independent special committee (the "Special Committee") of the GMP Board of Directors (the "Board").

Donald Wright, Chair of the Board and of the Special Committee commented, "The revised terms to the previously announced transaction in February 2020 strike what, we believe, is an appropriate balance taking into account the effects of the global pandemic, feedback raised by various stakeholders and retaining the appropriate level of capital to execute our long-term value creation strategy. This includes paying a special dividend to existing GMP shareholders of $0.15 per Common Share and securing the commitment of Richardson Financial Group to not have their preferred shares in RGMP redeemed on closing as otherwise required under the RGMP Shareholders Agreement, and instead leaving the $32.1 million in the Company to fund growth opportunities."

"For our shareholders, clients and employees, today's announcement signals an important step towards positioning our company for success after the brief delay caused by the global health crisis. Amongst many things, the health crisis has reminded us about the importance and demand for high-quality face-to-face advice especially during a period of volatile and uncertain markets. Richardson GMP demonstrated its resilience as assets under administration bounced back from the lows of $23.5 billion in March 2020 to just over $29 billion today. This is a credit to the 165 investment advisory teams and those that support them," said Kish Kapoor, Interim President and CEO of GMP."

Commenting further Mr. Kapoor said, "Now, we can move towards establishing our wealth platform at the forefront of the next generation of wealth. After a multi-year process to transform GMP, we can begin to capitalize on the considerable opportunities in the multi-trillion-dollar wealth management industry in Canada.  Canadian retail wealth is expected to grow to $7.7 trillion in the next decade, and together with our partners at Richardson GMP, we remain focused on the delivery of unparalleled face-to-face advice to affluent clients opting for non-bank points of access for holistic wealth management solutions in an effort to capture a greater share of the market."

"This transaction also recognizes the significant time, effort and commitment required to arrive at this outcome. For that, we are thankful to our shareholders, clients, advisors and our partners at RFGL for their support and patience. Powered by a strong balance sheet at the combined firms and the Richardson brand, which has a rich 90-year history of success in financial services, we are well positioned for an exciting period of growth in the Company for generations to come."

Other terms agreed to by the parties are consistent with those announced on February 26, 2020, including:

Retention payments - $36 million in retention payments to RGMP's investment advisors on closing of the RGMP Transaction, which remain subject to forfeiture provisions; and
Three-year escrow terms on GMP common shares issued to RGMP's shareholders - Subject to the satisfaction of certain conditions, upon closing of the RGMP Transaction, 10% of the GMP common shares to be issued to RGMP shareholders on closing (the "Consideration Shares") will be freely tradeable by the RGMP shareholders and the remaining 90% will be placed in escrow to be released, subject to the satisfaction of certain conditions, in equal amounts on the first, second and third anniversaries of the closing.

After giving effect to the RGMP Transaction, if completed, the Company will have an estimated 182.3 million common shares issued and outstanding. RFGL, GMP's largest shareholder with an aggregate ownership stake of approximately 24.1% of Common Shares immediately prior to the RGMP Transaction, will have an estimated aggregate ownership position of approximately 40.0% following completion of the RGMP Transaction. Existing GMP shareholders (other than RFGL) and Richardson GMP investment advisors will hold 31.4% and 28.5%, respectively, of GMP common shares following completion of the RGMP Transaction.