Andy Whelan’s plan for the future of GLI Finance is beginning to fall into place, as the company announces its intention to bring a number of GLI portfolio pieces into the newly formed Sancus BMS Group.
BMS Finance is a non-bank SME lender, and an investment platform of GLI Finance. BMS is now merging with Sancus – another member of the GLI family tree – to form the new “Sancus BMS” brand. Andy Whelan will be appointed as CEO of the newly minted entity. Sancus BMS will operate across 5 jurisdictions – Jersey, Guernsey, Gibraltar, UK and Ireland.
Sancus BMS will be acquiring the entire issued share capital of Sancus (Gibraltar) Limited from Sancus Gibraltar Holdings Limited and the intragroup loans that have been made by Sancus Gibraltar Holdings to Sancus, for a total of £23.5m. This will be settled through the issue of 43,408,360 of new ordinary shares, at a price of 31.1 pence per new ordinary share, and through the issue of £10m of unsecured bonds, paying a coupon of 7% per annum, which will be listed on the Cayman Islands Stock Exchange and which will be tradeable on UK Bond Network.
Sancus BMS will also be acquiring £5.175m of BMS shares from Tranquil Capital and the BMS Management Sellers. The remainder of BMS’ equity already belongs to GLI. The effect of these moves will be to reduce GLI’s NAV by “2.7p per share, or 1.8p per share on an adjusted basis” while allowing the company to take complete ownership of “strong, profitable and cash generative businesses with significant strategic benefits to the Group and potential for Shareholder value creation”.
When the dust has settled, Sancus Group Limited will be the sole shareholder of the Jersey, Guernsey and Gibraltar subsidiaries of Sancus.
We also learn that GLI intends to transfer its 84% shareholding and £5m in preference shares in Platform Black to Sancus – thereby renaming the entity as Sancus (PB) Limited. GLI subscribed for £5m of preference shares in the invoice finance platform in early March of this year.
GLI will also be issuing an initial amount of up to £4m in a bond offering via the UK Bond Network platform – for the purpose of partially repaying its outstanding syndicated loan facility with Sancus (Jersey) Limited and “other lenders”. As of 13 May 2016, the amount outstanding under the Sancus loan facility was £14.86m (with an interest rate of 8.75%, maturing in March 2017). Uncertainty over how this facility (previously a £30m facility with an interest rate of 11%, maturing March 2016) would be repaid played a role in the departure of former GLI boss Geoff Miller. The need to “substantially repay” the previous syndicated loan prompted the arrival of Somerston – a privately owned group of companies which is headquartered in Jersey. Somerston subscribed for 15m new ordinary shares at the price of 37 pence per share in December – with NAV then at 53 pence per share. Miller then resigned, with Whelan acceding to the role of CEO.
Mr. Whelan commented on today’s announcement:
“As the Company has developed over the past 4 years, following its shift in focus in 2012, its structure has become inefficient and an impediment to growth.”
“The proposals announced today will provide financial and operational efficiencies through simplifying the Group’s structure, and better position the Group for the further development and expansion of its niche lending businesses and platform portfolio. The Board believes that this is an exciting time for GLI as we continue the execution of our long-term growth strategy.”
“The Proposals do not require Shareholder approval, however the Board believes it appropriate to give shareholders the opportunity to consider the Proposals, hence our decision to call an Extraordinary General Meeting.”