GAM and the contentious investor alliance around the company Newgame have reached an agreement. Money is flowing, but shareholders and GAM's board of directors have to eat crow.
Following the failed takeover bid by Liontrust, GAM's board of directors of GAM reached an agreement with the investor alliance headed by Newgame and Rock Investment for an immediate cash infusion.
A loan of 20 million Swiss francs will cover the immediate liquidity needs of the Swiss fund firm, it was announced Tuesday.
Xavier Niel Orders
The short-term financing remains until it's replaced by the proceeds of a convertible bond of around 25 million francs issued by GAM. The creation of the conditional capital required for the issuance of the convertible bond will be proposed to GAM shareholders at an Extraordinary General Meeting (EGM) to be held on or about September 27.
At the EGM, Rock Investment, French billionaire Xavier Niel's holding company, will propose new members for GAM's Board of Directors.
GAM Board Members are Out
The asset manager's current board agreed to step down after the new board members are elected. Having adamantly rejected the demands of the investor alliance, Newgame and the GAM Board are recommending shareholders approve the proposed candidates for the Newgame Board.
A meeting with NewGAMe executives in London and Zurich is now also planned, and Newgame wants to install a CEO it designates, said to be a Swiss financial professional.
Drop in the Ocean
GAM shareholders facing a dilution of their stake due to the convertible bond, and the departing GAM board members are left eating crow following Newgame's victory in the bidding war.
The 20 million francs are just a drop in the bucket. GAM estimated its liquidity needs at 100 million francs in addition to having to repay a bridge loan to Liontrust.
