GLI Finance has announced this morning that, in light of feedback received as part of the marketing of the 2020 ZDP Shares to investors, the board has decided to cancel the Placing and Open Offer of 2020 ZDP Shares. Furthermore, the Board has decided that it will not be progressing with the issue of the CULS which had been considered as part of the capital raising exercise announced on 3 December 2015.
The Board has said that it intends to enter into a strategic relationship with Golf Investments Limited, a member of the Somerston group of companies, which the Board believes will reduce the Company’s overall cost of capital by both helping to accelerate the growth of GLI Asset Management Limited and GLI Alternative Finance Plc whilst repaying the outstanding Sancus Loan Facility.
Geoff Miller, CEO of the Company, has resigned with immediate effect. Andy Whelan, Executive Director of the Company (pictured), will take the role as the Company’s Interim CEO pending the appointment of a permanent replacement for Mr Miller.
The Board has said that it would like to (i) provide greater clarity over its approach to maximising value from GLIF’s 19 platform investments; and (ii) set out a clear policy for the Company’s future dividend payments.
With regards to maximising the value of the company’s platform portfolio, the board say that they expect this will generate significant long-term capital gains to shareholders. Taking into account the capital available to the Company, the Board believes that the focus of the business should be on supporting and developing those platforms with the greatest potential in the context of generating incremental shareholder value. Whilst the Board does not rule out future acquisitions in exceptional circumstances, the strategy going forward will be to maximise the value of the existing portfolio and the Board will carry out a detailed strategic review of the platform portfolio in 2016.
With regards to the company’s dividend policy, the Board say that they are aware that a number of investors in the Company have been attracted by its dividend and that, in their veiw, the structure of the Company and its focus on double digit returns on capital are such that dividends are a natural by-product of the underlying portfolio of assets. However, the Board believes that the dividend should be set at a level which provides sufficient flexibility so that the company can support its rapidly growing portfolio of platform assets. As such, the board say that, following implementation of the proposals, GLI Finance will pay a dividend of not less than 2.5p per annum paid quarterly. The Board say that they believe this will allow for a progressive dividend from here.
With regards to the newly announced strategic relationship with the Somerston Group of companies, GLI Finance say that it is at an advanced stage of negotiations with a view to forming a strategic relationship with Somerston. As part of these negotiations, Somerston, through Golf Investments Limited (a newly formed special purpose vehicle), has entered into a binding agreement to subscribe for 15,000,000 new ordinary shares in the capital of the company at 37p per Share. The Board say that it has also agreed indicative terms with Golf Investments Limited, which are subject to Shareholder approval, to provide the Group with further capital. Under the terms of the proposals GLIF will issue Golf Investments Limited with warrants exercisable over 32,000,000 Ordinary Shares in GLI Finance. These will be structured as follows:
10,000,000 Warrants at 40 pence per Ordinary Share;
10,000,000 Warrants at 45 pence per Ordinary Share; and
12,000,000 Warrants at 55 pence per Ordinary Share.
Whilst conditional upon the issue of the warrants being approved by shareholders, the company say that it is intended that Golf Investments Limited would also purchase from GLI Finance 15m shares in GLI Alternative Finance, currently held on GLI Finance’s balance sheet, at £1 per share or at the NAV per share. Somerston, through Golf Investments, has reportedly indicated its willingness to remaining a long term shareholder of GLI Alternative Finance. Furthermore, Golf Investments will subscribe or procure subscriptions for 10,000,000 C shares to be issued in GLI Alternative Finance within 12 months of completion of the Proposals. Golf Investments will also purchase 50% of GLI Asset Management (currently a wholly-owned subsidiary of GLI Finance) for £250,000. The company says that it would be there intention to expand GLI Alternative Finance and to develop other income related products which in turn will support the growth of the platforms owned by GLIF. Finally, under the proposals, Golf Investments will have the right to appoint one director to the Board of GLI Finance and two directors to the board of GLI Asset Management.
The company says that the proposals are subject to definitive agreement and documentation. The Board believes that the nominal NAV dilution of approximately 2% arising on the issue of the Placing Shares and the potential further dilution of the Warrants is offset by the advantages of the above arrangements and future strategic relationship with Somerston.