LONDON (Alliance News) - GLI Finance Ltd, the AIM-listed investor in alternative finance platforms for smaller companies, on Monday set out plans to bring together its Sancus and BMS trading business, following a strategic review carried out by new Chief Executive Officer Andy Whelan.
The combined Sancus BMS Group is expected to make pretax of about GBP2.5 million in 2016, rising to approximately GBP4.0 million in 2017, GLI Finance said in a statement, assuming full deployment of loan books, integration and "increasing levels" of commercial, operating and financial synergies.
The move will initially reduce GLI's pro forma net asset value - the difference between its assets and liabilities - by 2.7 pence per share, or 1.8p per share on an adjusted basis.
"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," Chief Executive Andy Whelan said in a statement.
Sancus BMS, which will operate as a unified lending business in Jersey, Guernsey, Gibraltar, UK and Ireland, will be created through two main transactions.
First, GLI will acquire Sancus (Gibraltar) Ltd from Sancus Gibraltar Holdings Ltd and the intragroup loans made by Sancus Gibraltar Holdings to Sancus Gibraltar for GBP23.5 million. GLI will make that payment in the form of 43.4 million new shares issued at at a fixed price of 31.1 pence, equivalent to GBP13.5 million, and new 7.0% unsecured bonds due 2021 for the remaining GBP10.0 million.
Whelan owns 6.05% of Sancus Gibraltar Holdings and GBP50,000 worth of preference shares, while his predecessor Geoffrey Miller owns 2.0%. John Davey, a director of Sancus Group owns a 6.24% stake in Sancus Gibraltar Holdings and GBP240,000 worth of preference shares. Whelan and Davey are also directors of Sancus Gibraltar Holdings.
Secondly, GLI will acquire the shares it doesn't already own in GLIF BMS Holdings Ltd from Tranquil Capital Ltd for GBP5.2 million. GLI will pay that in the form of 11.1 million new shares at 31.1p, equivalent to GBP3.5 million of the total, and GBP482,950 in cash "funded from existing cash resources and the satisfaction of certain sums owed by Tranquil to GLIF BMS Holdings Ltd".
GLI already owned 62.5% of GLIF BMS Holdings, which in turn owns the entirety of BMS Finance AB Ltd, the UK operating business, which was acquired in 2012 for GBP11.6 million. Tranquil Capital owns a 12.5% stake. Ewan Stradling, Shane Lanigan and Martin Ling, all classed as related parties under AIM rules, each owns an 8.3% stake.
GLI also holds 10-year 7.0% interest-bearing loan notes with a face value of about GBP16.0 million issued by GLIF BMS Holdings. GLIF BMS Holdings uses that money to support loan book growth at BMS Finance, a senior lending business focused on smaller companies.
Sancus Group Ltd, a company owned by GLI, will be the sole shareholder of the Jersey, Guernsey and Gibraltar subsidiaries of Sancus, and of GLIF BMS Holdings. Sancus Group Ltd, which continues to have a minority stake in Sancus IOM Holdings Ltd, will be rebranded as Sancus BMS.
As well as being listed on the Cayman Islands Stock Exchange, the 7.0% unsecured bonds GLI plans to issue to acquire Sancus Gibraltar will be tradeable on the platform of UK Bond Network Ltd, one of GLI's platform investments.
GLI also has plans to raise up to GBP4.0 million by selling further bonds through UK Bond Network, which will act as an agent for the company, using its website auction platform. The money raised will be used to help repay its syndicated loan facility with Sancus (Jersey) Ltd and other lenders. GLI owed GBP14.9 million under the facility as of Friday last week. The sale of the bonds is intended to coincide with completion of the acquisitions on or around June 30.
GLI also wants to make an intercompany transfer of its 84% holding of ordinary shares and GBP5.0 million of preference shares in Platform Black to Sancus Group, and to rename Platform Black as Sancus (PB) Ltd.
Although GLI doesn't require shareholder approval for the proposals, it's giving them the opportunity to consider the plans at a meeting scheduled for June 6.
Even though the transactions involved related parties, GLI said its directors have decided that the terms are "fair and reasonable" where shareholders of GLI are concerned. "Mr Whelan did not participate in the board's consideration of the related party transaction to which he is a party," GLI said. The board's decision came after consulting nominated adviser Panmure Gordon.
Shares in GLI were up 2.2% at 28.75 pence Monday morning.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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