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July 29, 2014
17:06 EDTJMPJMP Group evaluating restructuring transaction to become a partnership
JMP Group announced that its board has instructed its management to finalize its due diligence regarding the potential consummation of 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 its current structure. If the restructuring were to occur, it would be expected that JMP would be able execute its current business strategy in a manner that would minimize entity-level taxation on its net investment income. “We are very excited about the prospects for consummating this transaction, which would result in a more tax-efficient structure that will maximize distributable investment income to JMP shareholders,” said chairman and CEO Joe Jolson. “As such, this new corporate structure would be well aligned with how the firm has historically operated. Further, our dividend payout ratio could increase materially, depending on the mix of earnings between our operating platforms that would remain fully taxed corporations and our net investment earnings at the publicly traded partnership that will be mostly passed through to shareholders. 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 recent 30% to 35% targeted level. If our board gives its final approval upon the completion of our due diligence, we hope to move as rapidly as is practical to execute the Reorganization Transaction, with a targeted consummation date of January 1, 2015, to correspond with the taxable year.”
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