Two days before Liontrust's exchange offer deadline, GAM responded to the latest counter-offer from activist investors, warning the proposed loan won't be enough to cover costs.
The short-term bridge financing proposed by shareholder group Newgamee, or Rock Investments, is nowhere near enough, GAM wrote in a response to the activist shareholders' latest push last week.
«In our assessment, the proposed convertible bond is insufficient to maintain GAM as a going concern,» according to a statement on Monday.
Over 100 million francs Needed
The statement also refers to the semi-annual pre-tax operating loss of 23.5 million Swiss francs and obligations to the UK pension plan of 10 million Swiss francs per year. Additionally, restructuring costs are estimated at around 50 million francs based on an in-depth evaluation carried out by open-book due diligence over nine months.
Therefore, the capital infusion required in the immediate future adds up to over 100 million francs.
On Friday, Newgame held out the prospect of bridge financing of around 20 million francs through Rock Investment or its parent company NJJ should Liontrust's takeover bid fail.
Only Realistic Option?
GAM warns shareholders that such financing would either lead to significant dilution or result in significant debt for the company. It again underscored the potential efficiencies that could be realized by merging with Liontrust.
The GAM Board of Directors continues to «strongly» recommend shareholders accept Liontrust's offer. The exchange offer runs until 4 pm Wednesday, with the interim result scheduled for publication Thursday, August 24.
