JMP Group Inc. (NYSE: JMP), an investment banking and
alternative asset management firm, announced today that its board
of directors has approved a transaction whereby JMP Group, or
“JMP,” would enter into a series of related and concurrent internal
transactions to convert its corporate form into a limited liability
company that would be taxed as a partnership, and not as a
corporation, for U.S. federal income tax purposes. The proposed
restructuring transaction would allow JMP to operate in a more tax
efficient manner compared to that afforded by its current
structure. If the restructuring is approved by JMP’s stockholders,
it is expected that JMP would be able to execute its current
business strategy in a manner that would minimize entity-level
taxation of its net investment income.
As part of the transaction, JMP has entered into an agreement
and plan of merger with a newly formed, wholly owned, limited
liability company subsidiary, JMP Group LLC, and a newly formed
Delaware corporation and indirect wholly owned subsidiary, JMP
Merger Corp. Subject to the approval of JMP’s stockholders and the
decision of its board of directors to complete the transaction, JMP
would be merged with and into JMP Merger Corp., with JMP continuing
as the surviving entity and as a direct, wholly owned subsidiary of
JMP Group LLC (the “Reorganization Transaction”). The
Reorganization Transaction, if completed, would result in each
share of currently issued and outstanding JMP stock being exchanged
for a limited liability company interest in JMP Group LLC. On
August 20, 2014, JMP filed a preliminary proxy statement/prospectus
with the U.S. Securities and Exchange Commission (the “SEC”) on
Form S-4 for the Reorganization Transaction.
Following the Reorganization Transaction, JMP Group LLC would
hold, through its subsidiaries, including JMP, the assets currently
held by JMP. The Reorganization Transaction would have the effect
of converting JMP’s top-level form of organization from a
corporation to a limited liability company, with such conversion
treated as a tax-deferred contribution of JMP common stock to JMP
Group LLC for federal and state income tax purposes.
“If this transaction is approved by our stockholders and then
completed at the instruction of our board, our dividend payout
ratio could increase materially, depending on the mix of earnings
from the operating platforms that would remain fully taxed
corporations and earnings from net investment income at the
publicly traded partnership that will be mostly passed through to
shareholders,” said Chairman and Chief Executive Officer Joe
Jolson, reiterating comments he previously made regarding the
Reorganization Transaction. “Based on our current business mix,
adjusted for the restructuring transaction, we believe that the
dividend payout ratio could increase to a range of 50% to 70% of
operating earnings, from the most recently targeted level of 30% to
35%.”
JMP expects that the Reorganization Transaction, if approved by
its stockholders, will be completed by January 1, 2015, provided,
however, that JMP’s board of directors may elect to complete the
transaction prior to January 1, 2015, or defer completion before or
after the stockholder approval or may abandon the Reorganization
Transaction at any time.
Stockholder Implications
Because we expect that the Reorganization Transaction will be
treated as a tax-deferred contribution of JMP Group Inc. common
stock to JMP Group LLC for federal and state income tax purposes,
we do not expect that JMP stockholders will recognize any taxable
gain or loss upon the consummation of the Reorganization
Transaction. In addition, we expect that JMP stockholders will
receive a carryover tax basis in the shares of JMP Group LLC
received in the one-for-one exchange for shares of JMP Group Inc.
and that the capital gains holding period will also carry over.
In the preliminary proxy statement/prospectus that JMP filed in
connection with the Reorganization Transaction on August 20, 2014,
stockholders are urged to consult with their tax advisors regarding
the tax consequences that the Reorganization Transaction will have
on them.
It is JMP’s intent that the operations and assets of the new
parent company will remain the same as those that exist at JMP
prior to any Reorganization Transaction. It is expected that the
new parent company, JMP Group LLC, will be listed on the New York
Stock Exchange, exactly as JMP is currently listed. However, after
the Reorganization Transaction, JMP Group LLC is expected to be
treated as a partnership for purposes of federal and state income
taxes and, as a result, it will provide its stockholders with an
annual Schedule K-1 (IRS Form 1065).
IMPORTANT ADDITIONAL INFORMATION MAY BE
FILED WITH THE SEC
This communication is not a solicitation of a proxy from any
security holder of JMP. JMP filed a preliminary proxy
statement/prospectus with the SEC on August 20, 2014. The merger
will be submitted to JMP’s stockholders for their consideration,
and in connection with such consideration, JMP and JMP Group LLC
expect to file with the SEC a definitive proxy statement/prospectus
to be used to solicit JMP stockholder approval of the merger, as
well as other relevant documents concerning the proposed merger, as
part of a registration statement related to common shares of JMP
Group LLC. Security holders are urged to read the proxy
statement/prospectus, registration statement and any other relevant
documents when they become available, because they will contain
important information about JMP, JMP Group LLC and the merger,
including its terms and anticipated effects and risks to be
considered by JMP’s stockholders in connection with the merger.
The proxy statement/prospectus and other documents relating to the
merger, when available, may be obtained free of charge from the
SEC’s website, at http://www.sec.gov. The documents, when
available, may also be obtained free of charge from JMP on its
website, at http://www.jmpg.com, or upon written request to JMP
Group Inc., Attention: Investor Relations, 600 Montgomery
Street, Suite 1100, San Francisco, CA 94111, or by calling (415)
835-8900. Information appearing on JMP’s website does not
constitute a part of this press release.
PARTICIPANTS IN THE SOLICITATION
JMP and its officers and directors may be deemed to be
participants in the solicitation of proxies from JMP stockholders
with respect to the merger. Information concerning JMP’s directors
and executive officers is set forth in JMP’s proxy statement for
its 2014 annual meeting of stockholders, which was filed with the
SEC on April 29, 2014, and its Annual Report on Form 10-K, which
was filed with the SEC on March 13, 2014. These documents are
available free of charge at the SEC’s website, at
http://www.sec.gov, or in the investor relations section of JMP’s
website, at http://www.jmpg.com.
SAFE HARBOR FOR FORWARD-LOOKING
STATEMENTS
Statements in this press release regarding the merger, the
target date for completing the merger, future potential benefits of
the merger, and any other statements about JMP or JMP Group LLC
managements’ future expectations, beliefs, goals, plans or
prospects constitute “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995 and
as defined in Section 27A of the Securities Act and Section 21E of
the Exchange Act. These statements are subject to risks and
uncertainties and are based on the beliefs and assumptions of JMP
or JMP Group LLC managements, based on information currently
available to them. Forward-looking statements can be identified by
the use of the future tense or other forward-looking words such as
“could,” “will likely result,” “if,” “in the event,” “may,”
“might,” “should,” “shall,” “will,” “believe,” “expect,”
“anticipate,” “plan,” “predict,” “potential,” “project,” “intend,”
“estimate,” “goal,” “objective,” “continue,” or the negatives of
these terms and other similar expressions. These forward-looking
statements include information about possible or assumed future tax
benefits, financial condition, liquidity, results of operations,
plans, strategy and objectives. The statements we make regarding
the following subject matters are forward-looking by their
nature:
- consummating the merger or the
Reorganization Transaction;
- stockholder approval of the
Reorganization Transaction;
- the decision of the board of directors
to complete the Reorganization Transaction;
- the anticipated benefits of the
Reorganization Transaction;
- the timing of the Reorganization
Transaction;
- the tax treatment of the Reorganization
Transaction;
- the ability to increase the dividend
payout ratio; and
- the ability to list the new parent
company on the NYSE.
These forward-looking statements are based on our beliefs,
assumptions and expectations of future performance, taking into
account the information currently available to us. These statements
are only predictions based upon our current expectations and
projections about future events. There are important factors that
could cause our actual results, level of activity, performance or
achievements to differ materially from the results, level of
activity, performance or achievements expressed or implied by the
forward-looking statements, including the following:
- the potential impact of the
announcement of the merger or consummation of the merger, including
the potential impact to the value of our common stock;
- changes in our cash or liquidity
requirements;
- changes in tax laws and policies;
and
- economic conditions, including
volatility and disruption of the capital and credit markets.
Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee
future results, levels of activity, performance or achievements.
You should not rely upon forward-looking statements as predictions
of future events. We undertake no duty to update any of these
forward-looking statements after the date hereof to conform prior
statements to actual results or revised expectations unless
otherwise required by law.
About JMP Group
JMP Group Inc. is an investment banking and asset management
firm that provides investment banking, sales and trading, and
equity research services to corporate and institutional clients as
well as alternative asset management products and services to
institutional and high-net-worth investors. JMP Group operates
through three subsidiaries: JMP Securities, Harvest Capital
Strategies and JMP Credit Advisors. For more information, visit
www.jmpg.com.
Investor Relations ContactJMP Group Inc.Andrew Palmer,
415-835-8978apalmer@jmpg.comorMedia Relations ContactDukas
Public RelationsSeth Linden, 212-704-7385seth@dukaspr.comZach
Leibowitz, 212-704-7385zach@dukaspr.com
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