HC2 Holdings, Inc. (“HC2” or the “Company”) (NYSE: HCHC), a
diversified holding company, announced today that a subsidiary of
Global Marine Holdings, LLC, in which HC2 holds an approximate 73%
equity interest, has completed the sale of 100% of Global Marine
Group (“GMG”) to an investment affiliate of J.F. Lehman &
Company, LLC. The sale of GMG excludes the previously
announced sale of GMG’s 49% joint venture with Huawei Marine
Networks Co., Limited (“HMN”).
After repayment of pension and debt obligations
at GMG, along with other customary closing adjustments and
transaction fees, HC2 received net proceeds of $99 million from the
sale. The net proceeds will be used to repay HC2’s $15
million secured revolving line of credit and redeem approximately
$77 million of HC2’s 11.5% Senior Secured Notes (the “11.5% Notes”)
due 2021 at a redemption price of 104.5% of the principal amount,
in addition to the elimination of the pension liability and the $66
million of GMG vessel indebtedness from the consolidated balance
sheet.
The previously announced sale process of GMG’s
49% joint venture with HMN remains ongoing and is still expected to
close by the end of the first quarter of 2020. Upon closing
of the joint venture sale and subject to customary purchase price
adjustments, approximately $85 million of proceeds, net of
transaction fees and taxes, will be paid (of which HC2 will be
entitled to approximately 73%), in exchange for the 30% interest,
with the remaining 19% interest held by an indirect subsidiary of
HC2 subject to a two-year put option. Proceeds received from
the closing of the joint venture sale will be used to redeem
additional “11.5% Notes” at a redemption price of 104.5% of the
principal amount.
“We are pleased to close the sale of GMG, which
allows us to reduce our overall company debt and begins the process
of significantly de-levering our balance sheet at the corporate
level,” said Philip Falcone, Chairman, President and Chief
Executive Officer of HC2. “Over the next few months, we will
be able to redeem a sizable portion of the 11.5% Notes at the HC2
corporate level, which will serve to strengthen our capital
structure. Looking ahead, we remain intently focused on
continuing to execute on our debt reduction strategy, which
includes furthering our advanced discussions to divest Continental
Insurance and exploring our strategic options for DBM Global
Inc. At the same time, we are working diligently to further
reduce our corporate overhead and focusing on the longer-term
growth opportunities at our Broadcasting and Energy businesses and
unlocking value at our Life Sciences segment.”
About HC2
HC2 Holdings, Inc. is a publicly traded (NYSE:
HCHC) diversified holding company, which seeks opportunities to
acquire and grow businesses that can generate long-term sustainable
free cash flow and attractive returns in order to maximize value
for all stakeholders. HC2 has a diverse array of operating
subsidiaries across multiple reportable segments, including
Construction, Energy, Telecommunications, Life Sciences,
Broadcasting, Insurance and Other. HC2’s largest operating
subsidiary is DBM Global Inc., a family of companies providing
fully integrated structural and steel construction services.
Founded in 1994, HC2 is headquartered in New York, New York.
Learn more about HC2 and its portfolio companies at
www.hc2.com.
Cautionary Statement Regarding
Forward-Looking Statements
Safe Harbor Statement under the Private
Securities Litigation Reform Act of 1995: This press release
contains, and certain oral statements made by our representatives
from time to time may contain, forward-looking statements.
Generally, forward-looking statements include information
describing actions, events, results, strategies and expectations
and are generally identifiable by use of the words “believes,”
“expects,” “intends,” “anticipates,” “plans,” “seeks,” “estimates,”
“projects,” “may,” “will,” “could,” “might,” or “continues” or
similar expressions. The forward-looking statements in this press
release include, without limitation, any statements regarding our
expectations regarding building shareholder value, future cash
flow, longer-term growth and invested assets, the timing or
prospects of any refinancing of HC2's remaining corporate debt, any
statements regarding HC2’s expectations regarding entering
definitive agreements in respect of the potential divestitures of
Continental Insurance and/or DBM Global, reducing HC2’s leverage
and related interest expense at the holding company level generally
and with the net proceeds of such divestitures, reducing corporate
overhead, growth opportunities at HC2’s Broadcasting and Energy
businesses and unlocking value at HC2’s Life Sciences
segment. Such statements are based on the beliefs and
assumptions of HC2’s management and the management of HC2’s
subsidiaries and portfolio companies. The Company believes
these judgments are reasonable, but you should understand that
these statements are not guarantees of performance or results, and
the Company’s actual results could differ materially from those
expressed or implied in the forward-looking statements due to a
variety of important factors, both positive and negative, that may
be revised or supplemented in subsequent statements and reports
filed with the Securities and Exchange Commission (“SEC”),
including in our reports on Forms 10-K, 10-Q, and 8-K. Such
important factors include, without limitation, issues related to
the restatement of our financial statements; the fact that we have
historically identified material weaknesses in our internal control
over financial reporting, and any inability to remediate future
material weaknesses; capital market conditions, including the
ability of HC2 and HC2’s subsidiaries to raise capital; the ability
of HC2’s subsidiaries and portfolio companies to generate
sufficient net income and cash flows to make upstream cash
distributions; volatility in the trading price of HC2 common stock;
the ability of HC2 and its subsidiaries and portfolio companies to
identify any suitable future acquisition or disposition
opportunities; our ability to realize efficiencies, cost savings,
income and margin improvements, growth, economies of scale and
other anticipated benefits of strategic transactions; difficulties
related to the integration of financial reporting of acquired or
target businesses; difficulties completing pending and future
acquisitions and dispositions; effects of litigation,
indemnification claims, and other contingent liabilities; changes
in regulations and tax laws; and risks that may affect the
performance of the operating subsidiaries and portfolio companies
of HC2. Although HC2 believes its expectations and
assumptions regarding its future operating performance are
reasonable, there can be no assurance that the expectations
reflected herein will be achieved. There can be no assurance
that the HMN transaction will be completed as proposed or at
all. These risks and other important factors discussed under
the caption “Risk Factors” in our most recent Annual Report on Form
10-K filed with the SEC, and our other reports filed with the SEC
could cause actual results to differ materially from those
indicated by the forward-looking statements made in this press
release.
You should not place undue reliance on
forward-looking statements. All forward-looking statements
attributable to HC2 or persons acting on its behalf are expressly
qualified in their entirety by the foregoing cautionary
statements. All such statements speak only as of the date
made, and unless legally required, HC2 undertakes no obligation to
update or revise publicly any forward-looking statements, whether
as a result of new information, future events or otherwise.
Important Additional Information and
Where to Find It
HC2 plans to file a proxy statement (the “2020
Proxy Statement”) with the SEC in connection with the solicitation
of proxies for the annual meeting of HC2’s stockholders (the
“Annual Meeting”), together with a WHITE proxy
card. STOCKHOLDERS ARE URGED TO READ THE 2020 PROXY STATEMENT
(INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND ANY OTHER
RELEVANT DOCUMENTS THAT HC2 FILES WITH THE SEC CAREFULLY IN THEIR
ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION.
Stockholders will be able to obtain, free of
charge, copies of the 2020 Proxy Statement, any amendments or
supplements thereto and any other documents (including the WHITE
proxy card) when filed by HC2 with the SEC in connection with the
Annual Meeting at the SEC’s website (http://www.sec.gov), at HC2’s
website (http://ir.hc2.com) or by contacting Okapi Partners LLC by
phone at (877) 274-8654, by email at info@okapipartners.com or by
mail at 1212 Avenue of the Americas, 24th Floor, New York, New
York 10036.
Participants in the
Solicitation
HC2, its directors and certain of its executive
officers and employees may be deemed to be participants in the
solicitation of proxies from stockholders in connection with the
Annual Meeting. Additional information regarding the identity of
these potential participants, none of whom (other than Philip A.
Falcone, HC2’s Chairman, President and Chief Executive Officer)
owns in excess of one percent (1%) of HC2’s shares, and their
direct or indirect interests, by security holdings or otherwise,
will be set forth in the 2020 Proxy Statement and other materials
to be filed with the SEC in connection with the Annual Meeting.
Information relating to the foregoing can also be found in HC2’s
definitive proxy statement for its 2019 annual meeting of
stockholders (the “2019 Proxy Statement”), filed with the SEC on
April 29, 2019. To the extent holdings of HC2’s securities by such
potential participants (or the identity of such participants) have
changed since the information printed in the 2019 Proxy Statement,
such information has been or will be reflected on Statements of
Ownership and Change in Ownership on Forms 3 and 4 filed with the
SEC.
Contact:Investor Relations
Garrett Edson ir@hc2.com (212) 235-2691
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