The NewGAMe investor group has offered bridge financing to the Swiss fund house GAM. It intends to enter into equity swap transactions with a counterparty to increase its stake in GAM.
The facility is intended to replace Liontrust's loans to GAM if the British asset manager's takeover bid for the company fails, according to a media release Friday.
Keeping an Arm's Length
NewGAMe, which includes Bruellan, wrote to GAM's board offering short-term financing from Rock Investment or its parent NJJ Holding. The total amount is equivalent to Liontrust loans of about 20 million Swiss francs, with the terms reflecting an «arm's-length» transaction. The activist investors want to turn the company around, having said there is still value to be unlocked from GAM.
According to NewGAMe, the bridge financing ensures the Swiss fund house can continue operating if Liontrust's takeover bid fails, even if the amounts drawn by GAM under the Liontrust loans become due for repayment in the near term.
Increasing Stake Through Swap Deal
NewGAMe also agreed to enter into counterparty equity swap transactions to increase its stake in GAM where the investor group is granted exposure to up to 7.19 million GAM shares, representing 4.75 percent of GAM's share capital.
Currently, the investor group, which is engaged in a bidding war with the British asset manager for GAM, controls approximately 9.6 percent of GAM's issued share capital.
Albert Saporta, NewGAMe Director said, «Today’s actions continue to show that NewGAMe has a serious and credible plan for GAM and is ready to commit significant funding to ensure the company stays the course.»
He went on to say that it was evident, none of this would have happened had GAM and Liontrust let the Liontrust offer fail on 25 July instead of dragging out the process and extending deadlines to avoid the «inevitable reckoning with shareholders.» He now expects GAM's board will now work with Newgame to ensure «we can begin to turn the company around as soon as possible.»
