After reviewing Liontrust's offer prospectus for GAM shares, an investor group is demanding an audit to provide clarity on the proposed takeover.
An investor group controlling 9.4 percent of outstanding shares of GAM, comprised of Newgame and Bruellan, reviewed the offer letter from Lionstrust for its takeover of the troubled Swiss fund management company, laying out their concerns in a statement on Friday.
The offer raises questions about the circumstances that resulted in GAM's board recommending stockholders to accept an offer of Liontrust shares for the entire purchase price of the transaction. The investor group said the offer was a «lowball» one. For this and other reasons, the group is requesting a special audit at the upcoming extraordinary general meeting (EGM) in August.
Lack of Clarity
«The lack of clarity and candidness of Liontrust's and GAM's offer documents is disappointing. It raises significant concerns about the manner in which GAM's board has approached Liontrust's offer and the terms under which the board is trying to dispose of GAM's» Fund Management Services (FMS), said Antoine Spillmann, who is the investor group's proposed candidate for GAM chairman.
He went on to say that the offer documents make no mention of the EGM requested by the investor group speaks to «the contempt and lack of consideration that the Board is giving to the company's shareholders.»
Raising Concerns
One of the issues the Group has is that the board is relying on Liontrust for short-term funding at seven percent interest, which encumbers a significant amount of group assets. This, they say, raises the question of whether the Liontrust offer is to further the interest of GAM and its shareholders or is a way for the board to get out of a strategic dead-end.
Last month GAM said it would transfer its fund management services business to another provider. The investor group says that such a contract doesn't exist in the offer documents and «what is becoming clearer by the day, however, is that the board is prepared to dispose of the fund management services (FMS) activities at highly prejudicial conditions.»
They went on to say that nearly 20 percent of GAM shareholders supported Liontrust's offer, but it's now apparent in their view that «most of this support was non-committing and subject to further developments.»
Finally, the documents only vaguely reference the EGM, and don't provide clarity on when it will be held, leaving shareholders «left to guess whether those who will have already tendered their shares into Liontrust's offer would be entitled to vote at this (or these) crucial EGM(s).»
A Fair Offer
For its part, Liontrust believes its offer for GAM to be a fair one.
«We don't believe our bid is unfair - if it were, we would have heard of alternative bids after all. So far, our bid is the only one that GAM has officially received,» Liontrust CEO John Ions told finews.com in an interview last month.
The investor group said the price of GAM shares regularly fluctuates below the price range given by an independent expert mandated by the board.
«If we look at GAM's share price a month ago, we are actually paying a premium with our offer. Since then, the share price has gone up, and we have to accept that. Considering GAM's current financial situation, with a substantial IFRS loss of CHF 290 million in 2022 and severely reduced liquidity, our offer must seem very fair. We are saying: with the combination of the two companies, our chances of being successful increase enormously. It's about more than just the price,» Ions countered.
