The bidding war around GAM has run aground, and the proposed sale to Liontrust sale is foundering. An emergency lifeline beckons, but will the Swiss fund manager reach for it?
The recent lie of the land in the bidding war for GAM can be compared to roulette when the stakes can no longer be changed. The investor alliance around the French-Swiss company NewGAMe offered bridge financing on Friday, finews.com reported.
The loan could «pull» GAM if Liontrust's takeover bid were to fail and it subsequently withdraws a 20 million Swiss franc loan guarantee, some of which GAM has already drawn, according to Newgame. The loan from Liontrust is linked to the takeover's success and without the money, GAM is in danger of quickly running out of liquidity.
Immediate Turnaround Unlikely
The problem is Liontrust's takeover bid is making little headway and has been extended several times. In this respect, an immediate turnaround now brought into play by Newgame would indeed offer GAM a way out of its predicament.
GAM continues to back the Liontrust offer and declined to comment to finews.com on the bridge loan, making an abrupt U-turn towards Newgame, which is aiming to turn GAM around, unlikely.
Last Minute U-Turn?
The clock is ticking for GAM because of its ongoing losses and shrinking liquidity. It will likely wait to see if Liontrust can muster the necessary 67 percent of votes by the end of the offer period on August 23. According to an unofficial statement currently making the rounds, Liontrust has only secured around 30 percent of GAM's votes.
Large institutional investors generally decide at the end of an offer period about casting their votes. The GAM votes tied up in passive products, with talk of around 10 percent only likely to arrive once Liontrust already achieved the two-thirds majority.
