In an effort to focus on its core business, Loring Ward International Ltd. has made yet another divestiture. The New York-based provider of advisor services has signed a binding agreement to sell “essentially all assets and liabilities” of its private-client business, Loring Ward Capital Management, to Winnipeg-based Monarch Wealth Advisory Group Inc.

Monarch is controlled by Jeffrey Wheeler, a senior professional and veteran of LWCM. As of May 31, the division had about 170 clients and US$320 million in assets under management.

LWCM, which has been deemed a non-core asset by its LWI parent, provides wealth-management services primarily to clients of its former business management unit that was sold in 2006. The proceeds of the deal, which is expected to close next month, are based on future revenue and are expected to provide LWI — formerly the U.S. arm of Assante Corp. — with up to US$6.9 million over the next five years.

Jerry Melia, LWI’s chief financial officer, says that company decided to sell the asset-management business because the clients weren’t “completely within our control.”

“The business isn’t scalable,” he says. “There’s a high concentration in a few clients, but we wanted to have 100% focus on our turnkey asset-management business based in San Jose.” LWI offers its turnkey asset-management program to U.S. advisors and their clients.

It’s been a busy year for LWI. The company has been under pressure to increase value to its 2,000 shareholders, 90% of whom are in Canada. This spring, the company rejected a proposal from a group featuring one of its newest shareholders to acquire the outstanding shares of the firm. The $108-million offer, which was put forward by Alan Werba Acquisition Corp., came from Werba, a registered investment advisor, and Eli Reinhard, a property magnate from Silicon Valley who bought the ownership stake of Assante founder and former CEO Marty Weinberg in February. Combined, the pair own almost 19% of the company.

LWI also received overwhelming shareholder interest in its May share buyback offer but was only able to satisfy a small fraction of the requests. It offered investors $15.25 a share, a premium of more than $4 per share at the time, to repurchase 750,000 shares — about 8% of the total — and cancel them.

More than 6.3 million shares were subsequently submitted in response to the offer, comprising more than three-quarters of the company’s total float. Shares have been taken up on a pro rata basis, with about 12% of those submitted being repurchased.

Melia says LWI was expecting significant interest in its overture, considering the shares were trading below the offer price at the time. In the first week of February, LWI shares were trading on the Toronto Stock Exchange at $8.25 a share. In April, the shares were trading for slightly more than $11 a share but climbed above $13.50 by mid-June and surpassed $14 a month later.

Melia says other contributing factors are that the shares are concentrated in the hands of a few large shareholders, have little trading volume and are relatively illiquid.

“It’s a bulletin board stock,” Melia says. “The purchase price is based on the current growth, future prospects and cash reserves of the company. We feel the offer is fair market value.”

The offer price was finalized after LWI’s board of directors saw internal management projections and discussed the matter with the company’s financial advisors at BMO Nesbitt Burns Inc. in Toronto.

The move was made to provide a return to shareholders after the 2006 sale of its business management operations in California. Reducing its public float to 8.3 million shares was an effective use of financial resources and in the best interests of the company and shareholders alike, Melia says: “We had a fair amount of cash as a result. In the near term, we didn’t have any potential acquisition opportunities.”

Melia says the buyback is complete and payment of $11.4 million in total has been made to investors whose shares were accepted for purchase. Shares that weren’t bought will be returned promptly. The company will not speculate on whether further buybacks are in the offing.

LWI, which was spun off after Winnipeg-based Assante was acquired by CI Fund Management Ltd. for $846 million in the summer of 2003, announced last November that it would divest its business-management divisions, which provided wealth-management services to athletes and entertainers.

@page_break@Today, LWI services 692 independent advisors, who collectively have slightly fewer than 22,000 client accounts across 37 states in the U.S. LWI is affiliated with 90 broker-dealers. IE