LONDON (Alliance News) - GLI Finance PLC on Tuesday named the boss of its Sancus peer-to-peer lending platform as its permanent chief executive, and put forward a range of measures designed to reassure investors over potential conflicts of interest, shore up its balance sheet and reduce complexity in the business.
GLI, which lends money to smaller companies through finance platforms in which it has an equity stake, said Andy Whelan, who had been acting as chief executive on a temporary basis in the wake of Geoff Miller's resignation in December, will be able to take on the additional responsibility without compromising "momentum" at Sancus.
Whelan's permanent appointment comes as GLI looks for shareholder approval for a deal that will create a strategic relationship with Golf Investments Ltd, a member of the Jersey-based Somerston group of companies, which currently owns a 9.0% stake in the alternative finance provider.
The Somerston tie-up came after former CEO Geoff Miller stood down in December, after investors rejected GLI's plans for an issue of zero dividend preference shares and a possible sale of convertible unsecured bonds fell through. At the same time, GLI revealed plans for a strategic review.
On Tuesday, GLI said it will update shareholders on the "substantive and thorough" review as it progresses over the next 12 months. In the short term, the finance provider said conflicts of interest have arises because of two issues: inter-company loans and its relationship with London-listed investment trust GLI Alternative Finance PLC.
The group's Somerston deal is designed to pay back some of GLI Finance's GBP29.9 million debt to Sancus. With Somerston's Golf Investments set to take a 50% stake in GLI Asset Management from GLI Finance, which will hold the remaining half, about half of that debt will be repaid. GLI Finance said it is renegotiating what will remain a GBP14.9 million debt.
Following completion of the Somerston deal, the manager of GLI Alternative Finance, GLI Asset Management Ltd will rebrand, and have a "distinct" board of directors with an independent non-executive chairperson.
"We have already made significant progress rationalising intercompany loans. In the future, GLI Alternative Finance will seek to lend through platforms, and GLI Finance will only lend to platforms," the company said.
GLI Asset Management will be given "absolute discretion" to assess the platforms and makes investments, the company said. "Whether or not GLI is invested in a platform will have no bearing on whether or not the manager makes loans through that platform. GLI, on the other hand, will make debt and equity investments with the aim of achieving its strategic objective," GLI Finance said.
In addition, GLI Finance said it is taking action to lower costs, for example by closing non-performing subsidiaries, and cutting advisory fees and travel expenses. It expects to save about GBP1.0 million in total from future expenditure.
On top of those measures, GLI wants to improve cash flow, and confirmed it intends to pay a dividend of no less than 2.5 pence quarterly. "
"Following the initial findings of the strategic review, we can confirm that we expect this will be sustainable once we have executed and implemented our strategy during 2016," GLI said.
Meanwhile, GLI said it has written down some of the investments in its platform portfolio. It said also that in the past it invested in loans to certain unrelated parties, and has provisioned GBP5.5 million against some of those loans, which it hopes to recover at least in part.
"Going forward no such future lending will be made by the company," GLI said.
The writedowns played a role in causing GLI's net asset value to fall to 42.81 pence from 52.30p between September 30 and December 31. Since the end of 2015, GLI's Liftforward platform has completed a capital raise at a valuation of USD41.2 million, which will result in GLI revaluing its investment to GBP5.8 million from GBP4.2 million.
Shares in GLI were up 7.5% at 30.10 pence on Tuesday. The stock has lost about 18% of its value since the start of 2016.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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