GMP Capital Inc.
TSX : GMP

GMP Capital Inc.

February 01, 2011 15:41 ET

GMP Capital Inc. Announces $100 Million Offering of Cumulative Rate Reset Preferred Shares

TORONTO, ONTARIO--(Marketwire - Feb. 1, 2011) -

NOT FOR DISTRIBUTION INTO THE UNITED STATES OR TO UNITED STATES WIRE SERVICES

GMP Capital Inc. ("GMP") (TSX:GMP) today announced that it has entered into an agreement with a syndicate of underwriters led by National Bank Financial Inc., GMP Securities L.P. and Scotia Capital Inc., acting as joint bookrunners, under which the underwriters have agreed to purchase, on a bought-deal basis, 4,000,000 Cumulative 5-Year Rate Reset Preferred Shares, Series B (the "Series B Preferred Shares") at a price of $25.00 per share for aggregate gross proceeds to GMP of $100,000,000.

The Series B Preferred Shares will pay fixed cumulative dividends of $1.375 per share per annum, yielding 5.50% per annum, payable quarterly on the last day of March, June, September and December of each year, as and when declared by the Board of Directors of GMP, for the initial five year period ending on March 31, 2016. Thereafter, the dividend rate will be reset every five years at a rate equal to the sum of the then current five-year Government of Canada bond yield plus 2.89%.

The Series B Preferred Shares will be redeemable in whole or in part by GMP, at its option, on March 31, 2016, and on March 31 of every fifth year thereafter in accordance with their terms, at a cash redemption price per share of $25.00 together with all accrued and unpaid dividends.

Holders of Series B Preferred Shares will have the right, at their option, to convert their shares into Cumulative Floating Rate Preferred Shares, Series C (the "Series C Preferred Shares"), subject to certain conditions and GMP's right to redeem the Series B Preferred Shares as described above, on March 31, 2016 and on March 31 of every fifth year thereafter. Holders of the Series C Preferred Shares will be entitled to receive cumulative quarterly floating dividends at a rate equal to the sum of the then 90-day Government of Canada Treasury Bill yield plus 2.89%, as and when declared by the Board of Directors of GMP.

Holders of the Series C Preferred Shares may convert their Series C Preferred Shares into Series B Preferred Shares, subject to certain conditions and GMP's right to redeem the Series C Preferred Shares as described below, on March 31, 2021 and on March 31 every five years thereafter.

The Series C Preferred Shares will be redeemable in whole or in part by GMP, at its option, at a cash redemption price per share of $25.00 together with all accrued and unpaid dividends in the case of redemptions on March 31, 2021 and on March 31 every five years thereafter or $25.50 together with all accrued and unpaid dividends in the case of redemptions on any other date after March 31, 2016.

The Company has also granted the underwriters an option (the "Over-Allotment Option") to purchase up to an additional 600,000 Series B Preferred Shares, on the same terms and conditions as the offering, exercisable any time, in whole or in part, until the date that is 30 days from the closing date of the offering. If the Over-Allotment Option is exercised in full, the total gross proceeds to GMP will be $115,000,000.

The net proceeds of the offering will be used by GMP for general corporate purposes, which may include the reduction of indebtedness.

The Series B Preferred Shares will be offered for sale to the public in each of the provinces of Canada pursuant to a short form prospectus to be filed with Canadian securities regulatory authorities in all Canadian provinces.

DBRS Limited ("DBRS") has assigned a provisional rating of Pfd-3 (low) for the Series B Preferred Shares.

The offering is scheduled to close on or about February 22, 2011, subject to certain conditions, including Toronto Stock Exchange and other customary regulatory approvals, as well as other conditions set forth in the underwriting agreement.

The Series B Preferred Shares have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons, absent registration or an applicable exemption from registration requirements. This News Release does not constitute an offer to sell or the solicitation of an offer to buy any security, and shall not constitute an offer, solicitation, or sale of the securities in any state in which such offer, solicitation or sale would be unlawful.

About GMP

GMP Capital Inc. carries on business through the following principal entities: GMP Securities L.P., Griffiths McBurney Corp., GMP Securities Europe LLP, EdgeStone Capital Partners, L.P. and GMP Investment Management L.P. GMP Capital Inc. also has a significant non-controlling ownership interest in Richardson GMP Limited. The GMP Capital Inc. website is located at gmpcapital.com. GMP Capital Inc. has offices in Toronto, Calgary, Montreal and London, England. GMP Securities L.P. is a leading independent Canadian investment dealer focused on investment banking and institutional equities for corporate clients and institutional investors. GMP Securities L.P. can be found on the web at gmpsecurities.com. Griffiths McBurney Corp. services institutional clients in the United States while GMP Securities Europe LLP provides investment banking and institutional equity services to clients located in Europe. EdgeStone Capital Partners, L.P. is a leading private equity firm, providing capital, strategic direction and business and financial advice to help promising mid-market and early stage companies achieve their full potential. EdgeStone Capital Partners, L.P. can be found on the web at edgestone.com. GMP Investment Management L.P., through its private funds, seeks to generate superior risk-adjusted investment returns over the long term by executing selected investment strategies. GMP Investment Management L.P.'s offerings are aimed at both high-net-worth individuals and institutional investors. Richardson GMP Limited is a full-service investment firm, combining tradition and innovation to offer Canadian families and entrepreneurs access to innovative wealth management and investment services delivered by an experienced team of independent investment professionals. Richardson GMP Limited can be found on the web at www.richardsongmp.com.

FORWARD-LOOKING STATEMENTS

This press release contains "forward-looking statements" as defined under applicable Canadian securities laws and additional forward-looking statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts but instead represent management's beliefs, expectations, estimates and projections regarding future events, many of which, by their nature, are inherently uncertain and beyond our control. These statements include, but are not limited to, statements made with respect to management's beliefs, plans, estimates, and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "outlook", "objective", "may", "will", "expect", "intend", "estimate", "anticipate", "believe", "should", "plans" or "continue", or similar expressions suggesting future outcomes or events. Such forward-looking statements reflect management's current beliefs and are based on information currently available to management.

These statements are not guarantees of future performance and are subject to numerous risks and uncertainties, including those described in this press release. GMP's primary business activities are both competitive and subject to various risks. These risks include market, credit, liquidity, operational and legal and regulatory risks and other risk factors including, without limitation, variations in the market value of securities, the volatility and liquidity of equity trading markets, the volume of new financings and mergers and acquisitions, competition in the marketplace for suitable investments, sustainability of fees, nature and type of portfolio company investments, ability to realize carried interest entitlements and dependence on key personnel. Other factors, such as general economic conditions, including exchange rate fluctuations, may also have an effect on GMP's results of operations. Many of these risks and uncertainties can affect our actual results and could cause our actual results to differ materially from those expressed or implied in any forward-looking statement made by us or on our behalf. For a description of risks that could cause our actual results to materially differ from our current expectations, please see the "Risk Management" section in GMP's 2009 Annual MD&A and "Risk Factors" in GMP's annual information form dated March 1, 2010. Material assumptions or factors underlying the forward-looking statements contained in this press release are set out in the "Business Environment and Market Outlook" section in the 2009 Annual MD&A, as updated in GMP's Management's Discussion and Analysis for the three and nine months ended September 30, 2010 and include without limitation the impact of recent capital market uncertainty in light of growing concerns over sovereign debt issues within the European Union, increased equity market volatility, widening credit spreads, lower demand for Canadian resources from less certain economic activity in China and other emerging markets, and a weakening Canadian dollar relative to the United States dollar. Although forward-looking information contained in this press release is based upon what management believes are reasonable assumptions, there can be no assurance that actual results will be consistent with these forward-looking statements. Certain statements included in this press release may be considered a "financial outlook" for purposes of applicable Canadian securities laws, and as such the financial outlook may not be appropriate for purposes other than this press release. The forward-looking statements contained in this press release are made as of the date of this press release, and should not be relied upon as representing GMP's views as of any date subsequent to the date of this press release.

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