The bidding war for the crisis-ridden Swiss fund house enters the next round. NewGAMe aims some clear words at GAM investors.
The investor alliance around NewGAMe doesn't think much of Liontrust's offer for troubled Swiss asset manager GAM and said as much in a letter on Thursday night. «It is 30 minutes to midnight, and you still have plenty of time to consider tendering to Liontrust's ridiculous offer or not.»
That brings us to the next round of the fight. The group is responding to a letter and video earlier this week from GAM Chairman David Jacob. As reported by finews.com, he called on shareholders to tender their shares in the Liontrust offer. In addition, Jacob pointed out that GAM's existence was under threat, with a loan granted by Liontrust essential for the company's survival.
What Time is it?
Newgame and Liontrust seem to be in different time zones. For Newgame, there are still 30 minutes until the clock strikes twelve. Liontrust CEO John Ions had warned that the clock for GAM's future was at one minute to midnight. Either way, the clock is ticking towards July 25.
The investor group around Newgame, which includes Bruellan and holds a 9.6 percent stake in the Swiss asset manager, is urging GAM shareholders to delay their decision as long as possible. This could put «maximum pressure» on Liontrust to extend the offer period beyond July 25 and improve the offer, especially since it doesn't see it as a «fair» one.
Shareholders who've already tendered or are considering doing so at the current terms are now likely to represent a small minority.
In addition, the investor alliance stresses that it has received encouraging and positive feedback from shareholders and other investors for its turnaround plan. It launched a public tender offer for shares in crisis-hit GAM on Tuesday.
Supposed Lifeline
Also at issue is a 20 million Swiss franc loan Liontrust provided to GAM as an integral part of the takeover offer. According to NewGAMe, Liontrust provided GAM with a supposed lifeline, the first tranche of the loan, before the deal closed, which had to be recommended to and approved by GAM's board of directors. «This is not only unusual. It is unprecedented,» the letter read.
The group is also fighting back against GAM's claim the company is on the verge of going under because if the Liontrust offer fails, the credit facility will have to be repaid immediately.
Final and Fair Offer
Liontrust said Friday it had spoken with GAM shareholders and decided the offer was final and would not be increased. It said due diligence had reinforced the UK firm's belief that the offer for GAM was «good and fair,» according to a «Reuters» report.
Fomenting Fear?
To be sure only 10 million francs of the loan are at currently stake. The second tranche of the credit facility will only be triggered if Liontrust achieves 66.7 percent in the tender. The investor group points out that the agenda of the extraordinary general meeting on August 25 includes the issuance of a convertible bond of 25 million Swiss francs.
Last but not least, GAM is stoking fears among shareholders by extrapolating past and current losses, including AuM, into the future, it says. «This is not going to happen, whether under Liontrust’s management or NewGAMe’s turnaround plan,» the shareholder alliance writes.
In conclusion, it continues to recommend not accepting Liontrust's offer.
