Unitholders approved a proposal to convert GMP Capital Trust to a corporation on Friday, in a move that will allow the company to more effectively weather market uncertainty going forward, CEO Kevin Sullivan said.

At GMP’s annual general meeting in Toronto on Friday, more than two-thirds of unitholders voted in favour of the company’s plan to convert to a growth-oriented, dividend-paying corporation.

Speaking at the meeting, Sullivan said the conversion would simplify GMP’s corporate structure and would likely reduce administration costs. The change will also enhance the company’s access to capital and provide it with more flexibility regarding the growth and retention of capital, he said.

This flexibility will help GMP weather market uncertainty going forward, Sullivan added.

“Following the conversion, GMP will be better positioned to facilitate its future growth plans, should the current market and industry environment remain challenging,” he said.

GMP was slammed by the financial crisis in the fourth quarter of 2008, taking a net loss of $17.5 million and a 67% drop in revenue, to $33.8 million. In response to the downturn, the company implemented several cost cutting efforts and suspended monthly cash distributions to unitholders following its February 2009 distribution.

Upon completion of the conversion, GMP plans to begin distributing a quarterly dividend of 5¢ a share.

Throughout the remainder of 2009, the company will continue to focus on prudent risk management and containing costs, Sullivan said.

More favourable market conditions in recent months helped GMP post first-quarter results that showed improvements from its results in the fourth quarter of 2008. Sullivan said he is optimistic that market conditions will continue to improve in the months ahead.

“We are encouraged by the early indicators in the first quarter of 2009, and we remain hopeful that our solid Q1 results foreshadow better times ahead,” he said.

It is promising, Sullivan noted, that the stock market rally of recent days has displayed resilience, even to negative news emerging from the U.S. banking sector stress tests.

“You need new shocks to dislodge the confidence that’s starting to return to the market,” he said. “That’s a very favourable backdrop for us.”

In the months to come, GMP plans to grow by diversifying its product offerings and expanding to new geographies, Sullivan added.

In addition, a key part of the company’s growth strategy includes plans to expand its wealth management unit. In 2008, the company expanded the unit by adding five new investment advisory teams, and launching a new wealth management operation in the province of Quebec. The company finished the year with assets under administration of $3.4 billion, down 23% from the end of 2007.

“We continue to explore strategic opportunities, and recognize the importance of achieving greater scale and assets under administration in order to generate consistent profitability,” Sullivan said.

IE