LONDON (Alliance News) - GLI Finance Ltd on Monday said Chief Executive Geoff Miller has resigned, after the financing provider called off plans to sell new zero dividend preference shares and a possible issuance of convertible unsecured bonds.
GLI, which provides finance to smaller businesses, had been considering the sale of new ZDPs due in 2020 to help repay debt and possibly fund growth. The potential issuance of convertible bonds would have been used to replace the GBP30.0 million debt facility that will no longer be repaid with an issue of new ZDPs.
The decision to cancel the placing and open offer of the ZDPs was made following feedback received as part of the marketing exercise carried out in connection with the planned sale.
Miller will be replaced by Executive Director Andy Whelan on an interim basis. Whelan is a founding shareholder of Sancus, which was acquired late in 2014.
GLI Finance sought to clarify its approach to "maximising value" from its 19 platform investments, and set out a "clear policy" for future dividend payments.
"The board believes the company has an attractive and unique portfolio of platform companies, a number of which are growing very rapidly and are conservatively valued," GLI said. "Whilst the board does not rule out future acquisitions in exceptional circumstances, the strategy going forward will be to maximise the value of the existing portfolio and the board will carry out a detailed strategic review of the platform portfolio in 2016."
GLI Finance noted that a number of its investors have been attracted by its dividend, which is seen as a "natural byproduct" of its focus on generating double digit returns on capital. However, the company said the dividend should be set at a level that gives it the flexibility required to support its portfolio of platform assets. The plan is to pay a dividend of no less than 2.5 pence per annum, paid quarterly.
"The board believes that this policy allows a progressive dividend from a solid base," GLI Finance said.
In addition, the company said it plans on a "strategic relationship" with Gold Investments Ltd, a member of the Jersey-based Somerston group of companies, to reduce its overall cost of capital by speeding up the growth of GLI Asset Management Ltd and GLI Alternative Finance PLC while repaying debt.
Somerston, through Golf Investments, has agreed to subscribe for 15.0 million new shares in the company at 37 pence each. Admission is expected on December 31.
In addition, GLI Finance wants to issue Golf with warrants over: 10.0 million shares exercisable at 40.0p per share; over a further 10.0 million shares at 45.0p; and over 12.0 million shares at 55.0p.
The issue of warrants requires shareholder approval.
Under the company's plan, Golf will also buy 15.0 million of the shares held by GLI Finance in GLI Alternative Finance at the lower of its net asset value per share or GBP1.0 per share.
Golf will subscribe or procure subscriptions for 10.0 million C shares to be issued in GLI Alternative Finance within 12 months of completion of the proposals.
On top of that, Golf is to buy 50% of GLI Asset Management, currently fully owned by GLI Finance, for GBP250,000.
Golf will be able to appoint one director to GLI Finance's board and two directors to GLI Asset Management.
Shares in GLI Finance were down 4.2% at 35.70p on Monday afternoon, while shares in GLI Alternative Finance were flat at 101.49p.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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