GWG Holdings expands partnership with BEN, CEO Jon Sabes to step down
GWG Holdings and Beneficient, or BEN, announced an agreement between BEN and Jon Sabes, chairman and CEO of GWG, and Steven Sabes, a director of GWG, pursuant to which GWG and BEN will significantly expand their strategic partnership. Through a series of transactions, the expanded partnership accelerates the liquidity provider. BEN and GWG launched their strategic relationship through a transaction that was completed on December 28, 2018. The prior transaction furthered both companies' long-term objectives to expand the scope of the respective products and services they each provide to investors in alternative assets. As a result of the prior transaction, GWG holds approximately 86% of common partnership units of BEN and a $193M commercial loan receivable from BEN. In addition, GWG issued approximately 27M shares of its common stock and issued $367M in L Bonds to certain trusts that sold the BEN common partnership units to GWG. As a result of the prior transaction and the transaction announced, BEN will own approximately 7.6%, and the seller trusts will own approximately 79% and the voting control, of GWG's outstanding common stock. Under the agreement to expand the partnership between BEN and GWG, GWG's founding shareholders, CEO Jon Sabes and Steven Sabes, agreed to transfer all of their GWG common stock to BEN and a limited liability company, or SPV, controlled by an entity related to Thomas Hicks and whose members include entities related to Brad Heppner and Hicks in exchange for cash and a passive interest in the SPV, which also owns approximately 7% of the BEN founders' interest in BEN. GWG will expand its offerings to include BEN's interchange trust and exchange trust liquidity products to provide investors liquidity from illiquid alternative assets, including private equity, private real estate and other alternative asset funds, to obtain yield from a diversified portfolio of institutionally managed alternative investment holdings. Sabes intends to step down as GWG's Chairman and CEO and transition his full-time efforts to its to-be-formed wholly-owned subsidiary InsurTech Holdings, which includes the Life Epigenetics and YouSurance businesses. Murray Holland, a trust advisor of the seller trusts, will become CEO of GWG. GWG's board will be expanded from seven to up to thirteen members, and individuals serving on BEN's current board of directors, including Brad Heppner and Thomas Hicks, will replace the current members of GWG's board. Completion of the transaction is subject to the satisfaction of certain additional customary conditions and is expected to occur on or before April 30.