UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported): November 14, 2018
HC2 HOLDINGS, INC.
Delaware | 001-35210 | 54-1708481 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
450 Park Avenue, 30th Floor | ||
New York, NY 10022 | ||
(Address of principal executive offices) | ||
(212) 235-2690 | ||
(Registrant’s telephone number, including area code) | ||
Not Applicable | ||
(Former name or former address, if changed since last report.) | ||
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company | ☐ | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ |
Item 7.01 Regulation FD Disclosure
On November 14, 2018, HC2 Holdings, Inc. (the “Company” or “HC2”) announced that it priced a private offering of $470 million aggregate principal amount of senior secured notes due 2021 (the “Senior Secured Notes”) and a concurrent private offering of $55 million aggregate principal amount of convertible senior notes due 2022 (the “Convertible Senior Notes,” and together with the Senior Secured Notes, the “Notes”) at an issue price of 98.750% for the Senior Secured Notes and 100% of principal, plus accrued interest, if any, from November 20, 2018 for the Convertible Senior Notes (the “Notes Offerings”). Copies of the press releases are furnished with this Current Report on Form 8-K as Exhibit 99.1 and Exhibit 99.2 and are incorporated herein by reference.
The Company entered into Purchase Agreements (the “Purchase Agreements”) with Jefferies LLC, the initial purchaser named therein (the “Initial Purchaser”) and, solely with respect to the Senior Secured Notes offering, the guarantors named therein. Pursuant to the Purchase Agreements, the Initial Purchaser has agreed to purchase, and the Company has agreed to sell, $470 million aggregate principal amount of the Senior Secured Notes and $55 million aggregate principal amount of the Convertible Senior Notes. The Purchase Agreements contain representations and warranties, covenants and closing conditions that are customary for transactions of this type. The Company expects to use the net proceeds from the Notes Offerings and cash on hand to redeem all of its outstanding 11.000% Senior Secured Notes due 2019 and pay fees and expenses related thereto. The Notes Offerings are expected to close on November 20, 2018, subject to certain closing conditions.
The Notes will be offered solely by means of private placements to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and, solely with respect to the Senior Secured Notes offering, to certain persons in offshore transactions in accordance with Regulation S under the Securities Act. The Notes to be issued in the Notes Offerings have not been and will not be registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act. This Current Report on Form 8-K contains information about pending transactions, and there can be no assurance that these transactions will be completed.
This Current Report on Form 8-K does not constitute an offer to sell or the solicitation of an offer to buy any security and shall not constitute an offer, solicitation or sale of any security in any jurisdiction in which such offering, solicitation or sale would be unlawful.
This information shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be deemed to be incorporated by reference into any of the Company’s filings under the Securities Act or the Exchange Act, whether made before or after the date hereof and regardless of any general incorporation language in such filings, except to the extent expressly set forth by specific reference in such a filing.
Forward Looking Statements
This Current Report on Form 8-K, including the Exhibits, contains forward-looking statements. Actual results, events or developments may differ materially from those anticipated or discussed in any forward-looking statement. These statements are subject to risks, uncertainties and other factors, as discussed further in the press releases attached hereto as Exhibit 99.1 and Exhibit 99.2.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
Exhibit No. | |
99.1 | |
99.2 | |
99.3 | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
HC2 Holdings, Inc. | ||
November 14, 2018 | By: | /s/ Michael J. Sena |
Name: Michael J. Sena | ||
Title: Chief Financial Officer | ||
Exhibit 99.1
FOR IMMEDIATE RELEASE
HC2 Holdings Announces Pricing of its $470 Million Senior Secured Notes Private Offering
New York, November 14, 2018 (GlobeNewswire) - HC2 Holdings, Inc. (“HC2”) (NYSE: HCHC), a diversified holding company, announced today the pricing of $470 million aggregate principal amount of 11.50% senior secured notes due 2021 (the “Secured Notes”) being offered by the Company in a private offering (the “Offering”) exempt from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"). The Secured Notes are to be issued at an issue price of 98.750%. The Offering is expected to close on November 20, 2018, subject to customary closing conditions. The Company also announced today the pricing of $55 million aggregate principal amount of 7.5% convertible senior notes due 2022 (the “Convertible Notes”, and together with the Secured Notes, the “Notes”). The closing of this Offering is conditioned upon the closing of the offering of the Convertible Notes.
The Company expects to use the net proceeds from the issuance of the Notes, together with cash on hand, to redeem all of its outstanding 11% senior secured notes due 2019 and to pay fees and expenses related thereto.
The Secured Notes will be offered solely by means of a private placement to “qualified institutional buyers” in reliance on Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and outside the United States to non-U.S. persons in compliance with Regulation S under the Securities Act.
The Secured Notes have not been and will not be registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act.
This press release does not constitute an offer to sell or the solicitation of an offer to buy any security and shall not constitute an offer, solicitation or sale of any security in any jurisdiction in which such offering, solicitation or sale would be unlawful.
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 eight reportable segments, including Construction, Marine Services, Energy, Telecommunications, Life Sciences, Broadcasting, Insurance and Other. HC2’s largest operating subsidiaries include DBM Global Inc., a family of companies providing fully integrated structural and steel construction services, and Global Marine Systems Limited, a leading provider of engineering and underwater services on submarine cables. Founded in 1994, HC2 is headquartered in New York, New York.
Cautionary Statement Regarding Forward Looking Statements
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: This release contains, and certain oral statements made by our representatives from time to time may contain, forward-looking statements, including statements regarding the commencement or completion of the Offering. Generally, forward-looking statements include information describing the Offering and other 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, statements regarding our expectation regarding building shareholder value. 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 reports on Forms 10-K, 10-Q and 8-K. Such important factors include, without limitation, the ability of our subsidiaries (including target businesses following their acquisition) to generate sufficient net income and cash flows to make upstream cash distributions, capital market conditions, our subsidiaries’ ability to identify any suitable future acquisition opportunities, efficiencies/cost avoidance, cost savings, income and margins, growth, economies of scale, combined operations, future economic performance, conditions to, and the timetable for, completing the integration of financial reporting of acquired or target businesses with HC2 or the applicable subsidiary of HC2, completing future acquisitions and dispositions, litigation, potential and contingent liabilities, management’s plans, changes in regulations and taxes. 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 Securities and Exchange Commission (“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 HC2 undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
For information on HC2 Holdings, Inc., please contact:
Andrew G. Backman
Managing Director
abackman@hc2.com
212-339-5836
Exhibit 99.2
FOR IMMEDIATE RELEASE
HC2 Holdings Announces Pricing of its $55 Million Convertible Senior Notes Offering
New York, November 14, 2018 (GlobeNewswire) - HC2 Holdings, Inc. (“HC2”) (NYSE: HCHC) (the “Company”), a diversified holding company, announced today the pricing of an offering of $55 million aggregate principal amount of its 7.5% convertible senior notes due 2022 (“Notes”) in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”).
The Notes will be general unsecured and unsubordinated obligations of the Company. Interest will accrue on the Notes at a rate of 7.5% per annum, payable semi-annually in arrears on June 1 and December 1 of each year, beginning on June 1, 2019. The Notes will mature on June 1, 2022, unless converted, redeemed or repurchased in accordance with their terms prior to such date. The Notes will be convertible into shares of the Company’s common stock, based on an initial conversion rate of 228.3105 shares of the Company’s common stock per $1,000 principal amount of Notes, subject to adjustment in certain circumstances. The initial conversion rate is equivalent to an initial conversion price of approximately $4.38 per share, which represents a premium of approximately 20% over the last reported sale price of the Company’s common stock on November 13, 2018 of $3.65 per share.
The Company will have the right to redeem the Notes on or after June 1, 2020, subject to certain conditions.
The offering of the Notes is expected to close on November 20, 2018, subject to customary closing conditions. The Company intends to use the net proceeds from this offering, the net proceeds from its concurrent offering of Senior Secured Notes due 2021 and cash on hand to redeem all of its outstanding 11.000% Senior Secured Notes due 2019 and pay fees and expenses related thereto.
The Notes will be offered only to qualified institutional buyers pursuant to Rule 144A under the Securities Act. The offer and sale of the Notes and the common stock issuable upon conversion of the Notes have not been registered under the Securities Act or the securities laws of any other jurisdiction, and the Notes and such common stock may not be offered or sold in the United States absent registration or an applicable exemption from such registration requirements.
This press release does not constitute an offer to sell or the solicitation of an offer to buy any security and shall not constitute an offer, solicitation or sale of any security in any jurisdiction in which such offer, solicitation or sale would be unlawful.
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 eight reportable segments, including Construction, Marine Services, Energy, Telecommunications, Life Sciences, Broadcasting, Insurance and Other. HC2’s largest operating subsidiaries include DBM Global Inc., a family of companies providing fully integrated structural and steel construction services, and Global Marine Systems Limited, a leading provider of engineering and underwater services on submarine cables. Founded in 1994, HC2 is headquartered in New York, New York.
Cautionary Statement Regarding Forward Looking Statements
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: This release contains, and certain oral statements made by our representatives from time to time may contain, forward-looking statements, including statements regarding the commencement or completion of the offering. Generally, forward-looking statements include information describing the offering and other 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, statements regarding our expectation regarding building shareholder value. 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 reports on Forms 10-K, 10-Q and 8-K. Such important factors include, without limitation, the ability of our subsidiaries (including target businesses following their acquisition) to generate sufficient net income and cash flows to make upstream cash distributions, capital market conditions, our subsidiaries’ ability to identify any suitable future acquisition opportunities, efficiencies/cost avoidance, cost savings, income and margins, growth, economies of scale, combined operations, future economic performance, conditions to, and the timetable for, completing the integration of financial reporting of acquired or target businesses with HC2 or the applicable subsidiary of HC2, completing future acquisitions and dispositions, litigation, potential and contingent liabilities, management’s plans, changes in regulations and taxes. 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 Securities and Exchange Commission (“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 HC2 undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
For information on HC2 Holdings, Inc., please contact:
Andrew G. Backman
Managing Director
abackman@hc2.com
212-339-5836
Exhibit 99.3
RISK FACTORS RELATED TO THE CONVERTIBLE SENIOR NOTES OFFERING
The accounting method for convertible debt securities that may be required to be settled in cash, such as the notes we are offering, could have a material effect on our reported financial results.
Certain listing standards of The New York Stock Exchange limit the number of shares we may deliver upon conversion of the notes, unless we first obtain the approval of our stockholders. To comply with these listing standards, we may be required to partially settle in cash certain conversions of notes made in connection with a make-whole fundamental change or following our delivery of a redemption notice. See the Preliminary Offering Memorandum under the caption “Description of notes-Adjustment to shares of our common stock delivered upon conversion upon (i) a make-whole fundamental change or (ii) the delivery of a notice of redemption.”
We expect that, before we obtain the stockholder approval described in this offering memorandum, applicable accounting standards will require us to separately account for the conversion option associated with the notes as an embedded derivative. Under this treatment, the conversion option of the notes will be measured at its fair value and accounted for separately as a liability that is marked-to-market at the end of each reporting period. The initial value allocated to the conversion option will be treated as a debt discount that will be amortized into interest expense over the term of the notes. For each financial statement period after the issuance of the notes until we obtain the stockholder approval described in this offering memorandum, a gain (or
loss) will be reported in our statement of operations to the extent the valuation of the conversion option changes from the previous period. This accounting treatment may subject our reported net income (loss) to significant non-cash volatility. In addition, as a result of the amortization of the debt discount, the interest expense associated with the notes will be greater than the coupon rate on the notes, which will result in lower reported net income or higher reported net loss. If we obtain the stockholder approval referred to above, then we expect that the conversion option will qualify for equity treatment at that time and will no longer be marked to market at the end of each reporting period. However, we may never obtain this stockholder approval.
We have not reached a final determination regarding the accounting treatment for the notes, and the description above is preliminary. Accordingly, we may account for the notes in manner that is significantly different than described above.