GLI Announces Purchase Agreements for Certain Interests within Sancus Gibraltar & BMS

Andy WhelanGLI Finance has announced a proposed purchase of “certain interests in entities within the Sancus and BMS sub-groups of the Company.” GLI has entered into a conditional agreement and states it does not require shareholder approval to proceed with the acquisition but wanted to give “shareholders opportunity to consider what the Board believes is an important step in the development of the GLI’s business.” The acquistion would entail GLI issuing additional shares and debt to finance the purchase. In light of the proposal, GLI has scheduled a shareholder meeting for June 6th.

GLI is an alternative finance provider focusing on the SMEs. GLI Finance invests in, and operates in, niche or complementary SME lending verticals where they believe they can secure enduring competitive positions and take advantage of the disintermediation of lending by banks to SMEs. GLI went through an executive upheaval several months back as Andy Whelan was appointed CEO of the company to institute change. This most recent move is part of an ongoing strategic review of the Company’s operations initiated by the Whelan in December 2015.

The Board is advocating the acquisition as it believes it will simplify GLI’s operating structure and improve overall corporate performance thus driving value for shareholders. GLI states that following the acquisition the “Sancus BMS Group” will book a pre-tax profit of around £2.5 million for 2016. The company predicts this will rise to approximately £4 million in 2017 “when loan books are fully deployed, the businesses are fully integrated and increasing levels of commercial, operating and financial synergies are realised.” They also see this as a way of providing sufficient cash flow for future dividend payments.

Whelan commented on the proposal;

“As the Company has developed over the past 4 years, following its shift in focus in 2012, its structure has become inefficient and an impediment to growth. The proposals announced today will provide financial and operational efficiencies through simplifying the Group’s structure, and better position the Group for the further development and expansion of its niche lending businesses and platform portfolio.  The Board believes that this is an exciting time for GLI as we continue the execution of our long-term growth strategy. The Proposals do not require Shareholder approval, however the Board believes it appropriate to give shareholders the opportunity to consider the Proposals, hence our decision to call an Extraordinary General Meeting.”

The “Extraordinary General Meeting of the Company” will be held at the Company’s registered office at 10.30am on 6th June 2016 for the purpose of considering, and if thought fit, approving the Proposals.

A circular, including a notice convening the Extraordinary General Meeting, will today be posted to Shareholders and a copy will also be made available to view on the GLI website.

Additional information regarding the proposed transaction is below:

Highlights and summary of the Proposals:

 

  • The purpose of the Acquisitions is to increase the Company’s stake in the Sancus and BMS sub-groups and consolidate them under a new “Sancus BMS” brand, in order to create one unified lending business, operating in 5 jurisdictions; Jersey, Guernsey, Gibraltar, UK and Ireland.
  • Subject to shareholder approval the Company has agreed to acquire certain interests in the Sancus Gibraltar and BMS businesses as follows:
    • The entire issued share capital of Sancus (Gibraltar) Limited (“Sancus Gibraltar”) from Sancus Gibraltar Holdings Limited (“Sancus Gibraltar Holdings”) and the intragroup loans (the “Intragroup Loan”) made by Sancus Gibraltar Holdings to Sancus Gibraltar for a total consideration of £23.5 million, to be settled by the issue of 43,408,360 New Ordinary Shares issued by the Company at a fixed price of 31.1 pence per New Ordinary Share (being an aggregate issue price of £13.5 million) and new 7 per cent.  unsecured bonds due 2021 issued by the Company (the “Bonds”) in an aggregate principal amount of £10 million (the “Sancus Gibraltar Acquisition”); and
    • The ordinary shares that it does not already own in GLIF BMS Holdings Limited (“GBHL”) from Tranquil Capital Limited (“Tranquil”) and the BMS Management Sellers for a total consideration of approximately £5.175 million (subject to adjustment), to be settled by the issue of 11,093,247 New Ordinary Shares to the BMS Management Sellers at a fixed price of 31.1 pence per New Ordinary Share (being an aggregate issue price of £3.45 million) and the payment to Tranquil of £482,950 in cash, funded from existing cash resources and the satisfaction of certain sums owed by Tranquil to GBHL (the “BMS Acquisition”).
  • The effect of the transaction on the NAV of the Company will be initially to reduce the Company’s pro forma NAV by 2.7p per share, or 1.8p per share on an adjusted basis while taking 100% ownership of strong, profitable and cash generative businesses with significant strategic benefits to the Group and potential for Shareholder value creation.
  • Following completion, Sancus Group Limited (SGL), a wholly owned subsidiary of the Company, will be the sole shareholder of the Jersey, Guernsey and Gibraltar subsidiaries of Sancus. It will also be the sole shareholder of GLIF BMS Holdings Limited. SGL continues to hold its minority shareholding in Sancus IOM Holdings Limited.
  • It is also intended for the Company to make an inter-company transfer of its 84% holding of ordinary shares and £5 million in preference shares in Platform Black to SGL, and to rename Platform Black as Sancus (PB) Limited.
  • SGL, the holding company for these entities, will then be rebranded Sancus BMS. Andy Whelan, the chief executive officer of the Company, will be appointed chief executive of Sancus BMS.
  • The Bonds to be issued in connection with the Sancus Gibraltar Acquisition are to be listed on the Cayman Islands Stock Exchange and to be tradeable on the platform of UK Bond Network Limited, one of the Company’s platform investments.
  • The Company also intends to make available further Bonds to Eligible Investors in an initial amount of up to £4 million through UK Bond Network Limited as agent for the Company, using its designated website auction platform. The net proceeds from the UK Bond Network Issue will be applied towards repayment of the Company’s existing syndicated loan facility with Sancus (Jersey) Limited and other lenders. The amount outstanding under the Sancus Loan Facility as at 13 May 2016 (being the latest practicable date prior to publication of this announcement) was £14.86 million.
  • Eligible Investors who wish to access further details and participate in the UK Bond Network Issue will need to become a member of UK Bond Network’s platform. Eligible Investors should initially register their interest at www.ukbondnetwork.com/GLIFinance. The Company’s current intention is for the closing of the UK Bond Network Issue to coincide with the Completion of the Acquisitions on or around 30 June 2016. The Company will make a further announcement once the relevant offer documentation has been made available on the UK Bond Network platform.
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