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16 June 2006
GMP Capital Trust to acquire EdgeStone Capital Partners
Allows For Entry into Private Equity Space
TORONTO, June 16 /CNW/ - GMP Capital Trust (TSX: GMP.UN) ("GMP") and
EdgeStone Capital Partners ("EdgeStone"), one of Canada's leading private
equity firms, today jointly announce that they have entered into a binding
agreement under which a subsidiary entity of GMP will acquire EdgeStone
Capital Partners, L.P., the manager of the EdgeStone group of funds, together
with a portion of the carried interest entitlements in EdgeStone's funds.
"EdgeStone represents a premium franchise in the Canadian private equity
space and its people, culture and track record of performance represent an
exceptional fit with GMP. We are excited by the opportunity this transaction
represents as we continue to seek new ways to leverage the knowledge within
our franchise to the benefit of our rapidly growing client base." said Kevin
Sullivan, Chief Executive Officer, GMP.
"We believe there are significant mutual benefits to combining the two
organizations," said Samuel L. Duboc, President and Managing Partner of
EdgeStone. "This transaction will improve our deal sourcing capabilities by
providing us with access to GMP's extensive network of leading Canadian
entrepreneurs. This partnership will provide significant benefits to all of
our stakeholders, including, most importantly, the limited partners in our
funds and our portfolio companies."
"GMP recognizes, respects and values our successful investment strategy
and business practices," said Gilbert S. Palter, Chief Investment Officer and
Managing Partner of EdgeStone. "Therefore, while the two firms will work
closely together to enhance EdgeStone's business, GMP and EdgeStone have
agreed that GMP will not be involved in EdgeStone's investment process and
that EdgeStone will continue to manage its own day-to-day operations."
Terms of the deal
- Under the agreement, Griffiths McBurney L.P., a subsidiary entity of
GMP, will purchase all of the outstanding equity interests in
EdgeStone Capital Partners, L.P. and, indirectly, each of its
subsidiary entities and partnerships, including the general partners
of EdgeStone's funds.
- In consideration for the equity interests in EdgeStone Capital
Partners, L.P. as well as a portion of the carried interest
entitlements in EdgeStone's funds, the holders of such interests will
receive, in the aggregate, $62.0 million in cash and 4.02 million
Class B limited partnership units of Griffiths McBurney L.P.
("Exchangeable LP Units") that are exchangeable into units of GMP on a
one-for-one basis. GMP expects the acquisition of EdgeStone to be
accretive to its consolidated earnings in 2006. To finance a portion
of the acquisition, GMP has secured $30 million in subordinated
financing from a Canadian chartered bank.
- All of EdgeStone's key employees have committed to multi-year
employment agreements and will retain a substantial majority of their
carried interest entitlements in EdgeStone's funds.
- The Exchangeable LP Units to be issued pursuant to the transaction
will be subject to an escrow agreement and will be released over a
three-year period.
- The transaction is scheduled to close in July 2006.
ABOUT EDGESTONE CAPITAL PARTNERS
EdgeStone is one of Canada's leading private equity firms, with offices
in Toronto and Montreal, and has managed in excess of $2 billion of private
capital on behalf of institutional and high net worth clients. EdgeStone
provides capital, strategic direction and business and financial advice to
help promising mid-market and early stage companies achieve their full
potential. EdgeStone leverages the resources of its broad business network and
ensures an alignment of interests to achieve superior returns for all
stakeholders. The website is edgestone.com.
ABOUT GMP CAPITAL TRUST
GMP Capital Trust has three main operating subsidiaries: GMP Securities
L.P., Griffiths McBurney Corp. and GMP Private Client L.P. 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.
GMP Private Client L.P. is a full-service investment firm focused on
high-net-worth private investors that provides wealth preservation, income and
growth strategies delivered by seasoned investment advisors. GMP Private
Client L.P. can be found on the web at gmpprivateclient.com. GMP Capital Trust
is listed on the Toronto Stock Exchange under the symbol GMP.UN. The website
is gmpcapitaltrust.com. The GMP group has offices in Toronto, Calgary,
Montreal, Vancouver and Geneva, Switzerland.
This press release may contain forward-looking statements relating to
expected future events and financial and operating results of GMP that involve
risks and uncertainties. Actual results may differ materially from management
expectations as projected in such forward-looking statements for a variety of
reasons, including market and general economic conditions and the risks and
uncertainties detailed from time to time in GMP's interim and annual financial
statements, management's discussion & analysis and prospectuses filed with the
Canadian securities regulatory authorities. Due to the potential impact of
these factors, the Fund disclaims any intention or obligation to update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise, unless required by applicable law.
For further information: please contact:
GMP Capital Trust, Investor Relations
145 King Street West, Suite 1100
Toronto, Ontario M5H 1J8
Tel: (416) 367-8600 Fax: (416) 943-6143
Email: investorrelations@gmpcapitaltrust.com
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