Murray Edwards’ FirstEnergy Capital acquired by GMP Capital

Upon closing, certain key members of FirstEnergy’s management team will assume leadership roles at GMP

FirstEnergy Capital, a capital investment company based out of Calgary, has merged with GMP Capital. — Photo courtesy Murray Edwards/FirstEnergy

FirstEnergy Capital, a Calgary company co-founded by Murray Edwards has merged with another capital investment company, GMP Capital, based in the Toronto.  Murray Edwards is well-known in the Kootenays as the owner of the ski resorts in Fernie, Kimberley and Golden that make up part of the Resorts of the Canadian Rockies, as well as the high profile owner of the Calgary Flames, majority owner of Imperial Metals (owner of the Mt Polley mine) and owner of the oil and gas giant Canadian Natural Resources.

GMP Capital Inc. (GMP) (TSX: GMP) announced on August 4, 2016 that it has agreed to acquire FirstEnergy Capital Corp. (FirstEnergy). Established in 1993, FirstEnergy is an industry leader in the global energy sector providing financial advisory and investment services to a broad range of corporate clients and sophisticated investors worldwide.

Since 2008, FirstEnergy has completed over $63 billion in equity financing transactions in the energy sector and has advised on 159 transactions with an aggregate value of $31 billion. The firm has 91 employees in its Calgary and London offices across investment banking, sales and trading and research. GMP will operate the combined energy businesses under the “GMP FirstEnergy” brand.

Under the definitive purchase agreement (the Purchase Agreement), GMP will acquire FirstEnergy for total consideration on closing of $98.6 million, consisting of approximately $58.9 million in restricted GMP common shares (the Restricted Shares) with the remainder being paid by GMP through the issuance of an unsecured promissory note. The number of common shares to be issued by GMP will be 11,161,671 Restricted Shares, which is based on the volume-weighted average closing price of GMP common shares on the Toronto Stock Exchange for the 10 days prior to the date of the Purchase Agreement. Upon closing, a significant portion of the common shares issued to FirstEnergy shareholders will be subject to an escrow agreement, and will be released on a pro-rata basis over a four-year period.

Commenting on the transaction, Harris Fricker, GMP’s Chief Executive Officer and President, said “The opportunity to join forces with a highly respected industry leader that has been part of the fabric of Canada’s energy culture for nearly a quarter century was very appealing to us. This significant investment reconfirms our commitment to Calgary and the oil and gas sector and is aligned with our longer-term bullish view of the energy market. Today’s announcement also marks a significant demarcation in the independent brokerage space and transforms the scale of our energy business in a very meaningful way. We look forward to welcoming our new business partners and supporting them as they continue to build on their strengths and expertise in energy.”

"This strategic partnership with GMP, given its broader platform and greater access to efficient capital represents the best path forward for our valued clients and business partners, with the merger of two similar cultures,” said John Chambers, Chief Executive Office of FirstEnergy. “GMP’s long-standing commitment to the energy sector and the Calgary community was important to us and our clients. We are also pleased that GMP recognizes the strength of the FirstEnergy brand built over the past two decades and I am confident that GMP FirstEnergy will become equally embedded in the Canadian energy culture. We are committed to a seamless integration to ensure that the exceptional service and execution, to which our collective clients have become accustomed to, is not disrupted.”

Upon closing, certain key members of FirstEnergy’s management team will assume leadership roles at GMP. Jim Davidson, FirstEnergy’s Executive Chairman, will become Deputy Chairman of GMP Securities L.P., and John Chambers, FirstEnergy’s CEO, will serve as Vice Chairman and President of GMP FirstEnergy. In addition, Nicholas Johnson will serve as Vice Chairman and Co-Head Energy Investment Banking and Trent Boehm will serve as Vice Chairman and Head of Energy Capital Markets. Joining GMP’s Executive Committee from FirstEnergy will be John Chambers, Nicholas Johnson and Trent Boehm.

About FirstEnergy

Established in 1993, FirstEnergy is an industry leader in the global energy sector providing financial advisory and investment services to a broad range of corporate clients and sophisticated investors worldwide. Our technical expertise and comprehensive understanding of oil and gas assets around the globe allow us to deliver superior advice and execution to our clients.

Completion of the transaction is subject to a number of customary closing conditions, including regulatory approval. The transaction is expected to be completed in the fall of 2016.