Click here to close now.

SYS-CON MEDIA Authors: Bart Copeland, Andreas Grabner, Liz McMillan, Dana Gardner, Elizabeth White

News Feed Item

HC2 Announces Acquisition of a Majority Interest in Schuff International, Inc. and Completion of Related Financing Transactions

HERNDON, VA -- (Marketwired) -- 05/30/14 -- HC2 Holdings, Inc. ("HC2") (OTCBB: HCHC) announced today the completion of the previously announced acquisition of 2.5 million shares of common stock of Schuff International, Inc. ("Schuff") and negotiated an agreement to purchase an additional 200,000 shares of Schuff, representing an approximately 65% interest in Schuff.

Philip A. Falcone, HC2's Chairman, President and Chief Executive Officer, stated, "We are thrilled to complete HC2's first acquisition with the purchase of a majority interest in Schuff. Schuff has an impressive reputation as a steel fabrication and erection company and we look forward to working with the Schuff management team and employees."

The aggregate consideration for the shares of Schuff acquired was approximately $85 million, which was funded using the net proceeds from (i) the issuance of $30 million of Series A Convertible Participating Preferred Stock of HC2 (the "Preferred Stock") and $6 million of common stock of HC2, and (ii) the entry into a new senior secured credit facility providing for an eighteen month term loan of $80 million, each of which was also completed on May 29, 2014. Any additional funds raised by the foregoing transactions will be used for general corporate purposes including potential acquisitions.

Pursuant to a Securities Purchase Agreement by and among HC2 and affiliates of Hudson Bay Capital Management, Benefit Street Partners LLC and DG Capital Management (collectively, the "Purchasers"), HC2 issued and sold to the Purchasers (i) 30,000 shares of Preferred Stock for a purchase price of $1,000 per share and (ii) 1,500,000 shares of common stock of HC2 for a purchase price of $4.00 per share. The Preferred Stock is initially convertible at a conversion price of $4.25, subject to adjustment from time to time for various corporate transactions. The terms of the Preferred Stock also include a quarterly cash dividend at an annualized rate of 7.50%, and a cumulative quarterly pay-in-kind dividend at an annualized rate of 4.00%, which may be increased to 7.25% upon the occurrence of certain events and may be reduced to 2.00% or 0% if HC2 achieves specified rates of growth measured by net asset value. As of today, the Preferred Stock represents on an as-converted basis, together with the shares of common stock issued to the Purchasers, approximately 34% of HC2's outstanding common stock.

Holders of the Preferred Stock will have the right to vote together with the holders of common stock on all matters upon which the holders of common stock are entitled to vote, on an as-converted basis. Moreover, for so long as the Purchasers maintain certain ownership thresholds in HC2 (on an as-converted basis), the holders of Preferred Stock will have the right to appoint and elect (voting as a separate class) at least one director of HC2. Please refer to HC2's Form 8-K to be filed with the Securities and Exchange Commission for a more complete description of the terms of the Preferred Stock.

Keith M. Hladek, HC2's Chief Operating Officer, commented, "We are pleased with the response to our capital raise. This new capital will allow HC2 to pursue strategic acquisitions."

The senior secured credit facility has been established pursuant to a Credit Agreement (the "Credit Agreement") by and among HC2, certain subsidiary guarantors of HC2, the lenders party thereto from time to time, Jefferies LLC, as lead arranger, as book manager, as documentation agent for the lenders and as syndication agent for the lenders, and Jefferies Finance LLC, as administrative agent for the lenders and as collateral agent for the secured parties. The Credit Agreement contains certain customary representations, affirmative covenants and negative covenants, including a financial covenant that requires HC2 to maintain a certain collateral coverage ratio and Schuff to maintain a minimum EBITDA and certain limitations on capital expenditures that may be made by each of HC2 and Schuff. Borrowings under the Credit Agreement will bear interest at a floating rate which can be, at HC2's option, either (i) an alternate base rate (of not less than 2%) plus an applicable margin or (ii) a LIBOR borrowing rate for a specified interest period (of not less than 1%) plus an applicable margin. The applicable margin for borrowings under the Credit Agreement starts at 7.50% per annum for alternate base rate loans and 8.50% per annum for LIBOR loans and increases by 25 basis points every three months.

This press release is not an offer to sell or a solicitation of offers to buy Preferred Stock or common stock. The Preferred Stock and common stock issued to the Purchasers have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent an effective registration statement or an exemption from the registration requirements under applicable federal and state securities laws.

About HC2

HC2 operates as a holding company of operating subsidiaries primarily in the United States and the United Kingdom. HC2's indirectly wholly owned subsidiary PTGi International Carrier Services, Inc. ("PTGi ICS") is one of the leading international wholesale service providers to fixed and mobile network operators worldwide. PTGi ICS owns and operates its own global network of next-generation IP soft switches and media gateways. HC2 owns approximately 65% of Schuff International, Inc., the largest steel fabrication and erection company in the United States. HC2's indirectly wholly owned subsidiary Genovel Orthopedics, Inc. is researching the development of innovative products to treat early osteoarthritis of the knee. Founded in 1994, HC2 is headquartered in Herndon, Virginia. For more information, visit: www.HC2.com.

Cautionary Statement Regarding Forward Looking Statements

This release contains, and certain oral statements made by our representatives from time to time, may contain, "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements are based on current expectations, and are not strictly historical statements. These forward-looking statements include statements regarding HC2's expectations for the Schuff acquisition, the impact of the Preferred Stock and the Credit Agreement and plans and expectations regarding potential future acquisitions, dispositions and financing transactions. In some cases, you can identify forward-looking statements by terminology such as "if," "may," "should," "believe," "anticipate," "future," "forward," "potential," "estimate," "opportunity," "goal," "objective," "growth," "outcome," "could," "expect," "intend," "plan," "strategy," "provide," "commitment," "result," "seek," "pursue," "ongoing," "include" or in the negative of such terms or comparable terminology. These forward-looking statements inherently involve certain risks and uncertainties and are not guarantees of performance or results, or of the creation of shareholder value, although they are based on our current plans or assessments which we believe to be reasonable as of the date hereof. Factors or risks that could cause our actual results to differ materially from the results are more fully described in our most recent annual report, quarterly reports or other filings with the Securities and Exchange Commission, which are available through our website at www.HC2.com. Such factors and risks that relate to the acquisition of shares of Schuff, the Preferred Stock issuance and the entry into the Credit Agreement include the risk that we may fail to achieve the expected benefits of the acquisition of a majority interest in Schuff; our inability to comply with covenants in the Credit Agreement, the certificate of designation governing our Preferred Stock, including our obligation to pay dividends to holders of Preferred Stock, and future financing or refinancing agreements; the impact on our business and financial condition of our substantial indebtedness and the significant additional indebtedness and other financing obligations we and our subsidiaries may incur; the impact on the holders of our common stock if we issue additional shares of our common stock or Preferred Stock; and the effect of price fluctuations in our common stock caused by the conversion of our Preferred Stock. Other unknown or unpredictable factors could also affect our business, financial condition and results. Although we believe that the expectations reflected in the forward-looking statements are reasonable, there can be no assurance that any of the estimated or projected results will be realized. You should not place undue reliance on these forward-looking statements, which apply only as of the date hereof. Subsequent events and developments may cause our views to change. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so.

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
One of the biggest impacts of the Internet of Things is and will continue to be on data; specifically data volume, management and usage. Companies are scrambling to adapt to this new and unpredictable data reality with legacy infrastructure that cannot handle the speed and volume of data. In his session at @ThingsExpo, Don DeLoach, CEO and president of Infobright, will discuss how companies need to rethink their data infrastructure to participate in the IoT, including: Data storage: Understand...
Since 2008 and for the first time in history, more than half of humans live in urban areas, urging cities to become “smart.” Today, cities can leverage the wide availability of smartphones combined with new technologies such as Beacons or NFC to connect their urban furniture and environment to create citizen-first services that improve transportation, way-finding and information delivery. In her session at @ThingsExpo, Laetitia Gazel-Anthoine, CEO of Connecthings, will focus on successful use c...
Sensor-enabled things are becoming more commonplace, precursors to a larger and more complex framework that most consider the ultimate promise of the IoT: things connecting, interacting, sharing, storing, and over time perhaps learning and predicting based on habits, behaviors, location, preferences, purchases and more. In his session at @ThingsExpo, Tom Wesselman, Director of Communications Ecosystem Architecture at Plantronics, will examine the still nascent IoT as it is coalescing, includin...
The true value of the Internet of Things (IoT) lies not just in the data, but through the services that protect the data, perform the analysis and present findings in a usable way. With many IoT elements rooted in traditional IT components, Big Data and IoT isn’t just a play for enterprise. In fact, the IoT presents SMBs with the prospect of launching entirely new activities and exploring innovative areas. CompTIA research identifies several areas where IoT is expected to have the greatest impac...
Wearable devices have come of age. The primary applications of wearables so far have been "the Quantified Self" or the tracking of one's fitness and health status. We propose the evolution of wearables into social and emotional communication devices. Our BE(tm) sensor uses light to visualize the skin conductance response. Our sensors are very inexpensive and can be massively distributed to audiences or groups of any size, in order to gauge reactions to performances, video, or any kind of present...
SYS-CON Events announced today that GENBAND, a leading developer of real time communications software solutions, has been named “Silver Sponsor” of SYS-CON's WebRTC Summit, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. The GENBAND team will be on hand to demonstrate their newest product, Kandy. Kandy is a communications Platform-as-a-Service (PaaS) that enables companies to seamlessly integrate more human communications into their Web and mobile applicatio...
VictorOps is making on-call suck less with the only collaborative alert management platform on the market. With easy on-call scheduling management, a real-time incident timeline that gives you contextual relevance around your alerts and powerful reporting features that make post-mortems more effective, VictorOps helps your IT/DevOps team solve problems faster.
Skeuomorphism usually means retaining existing design cues in something new that doesn’t actually need them. However, the concept of skeuomorphism can be thought of as relating more broadly to applying existing patterns to new technologies that, in fact, cry out for new approaches. In his session at DevOps Summit, Gordon Haff, Senior Cloud Strategy Marketing and Evangelism Manager at Red Hat, will discuss why containers should be paired with new architectural practices such as microservices ra...
Roberto Medrano, Executive Vice President at SOA Software, had reached 30,000 page views on his home page - http://RobertoMedrano.SYS-CON.com/ - on the SYS-CON family of online magazines, which includes Cloud Computing Journal, Internet of Things Journal, Big Data Journal, and SOA World Magazine. He is a recognized executive in the information technology fields of SOA, internet security, governance, and compliance. He has extensive experience with both start-ups and large companies, having been ...
Companies today struggle to manage the types and volume of data their customers and employees generate and use every day. With billions of requests daily, operational consistency can be elusive. In his session at Big Data Expo, Dave McCrory, CTO at Basho Technologies, will explore how a distributed systems solution, such as NoSQL, can give organizations the consistency and availability necessary to succeed with on-demand data, offering high availability at massive scale.
From telemedicine to smart cars, digital homes and industrial monitoring, the explosive growth of IoT has created exciting new business opportunities for real time calls and messaging. In his session at @ThingsExpo, Ivelin Ivanov, CEO and Co-Founder of Telestax, shared some of the new revenue sources that IoT created for Restcomm – the open source telephony platform from Telestax. Ivelin Ivanov is a technology entrepreneur who founded Mobicents, an Open Source VoIP Platform, to help create, de...
The industrial software market has treated data with the mentality of “collect everything now, worry about how to use it later.” We now find ourselves buried in data, with the pervasive connectivity of the (Industrial) Internet of Things only piling on more numbers. There’s too much data and not enough information. In his session at @ThingsExpo, Bob Gates, Global Marketing Director, GE’s Intelligent Platforms business, to discuss how realizing the power of IoT, software developers are now focu...
Security can create serious friction for DevOps processes. We've come up with an approach to alleviate the friction and provide security value to DevOps teams. In her session at DevOps Summit, Shannon Lietz, Senior Manager of DevSecOps at Intuit, will discuss how DevSecOps got started and how it has evolved. Shannon Lietz has over two decades of experience pursuing next generation security solutions. She is currently the DevSecOps Leader for Intuit where she is responsible for setting and driv...
Operational Hadoop and the Lambda Architecture for Streaming Data Apache Hadoop is emerging as a distributed platform for handling large and fast incoming streams of data. Predictive maintenance, supply chain optimization, and Internet-of-Things analysis are examples where Hadoop provides the scalable storage, processing, and analytics platform to gain meaningful insights from granular data that is typically only valuable from a large-scale, aggregate view. One architecture useful for capturing...
SYS-CON Events announced today that Vitria Technology, Inc. will exhibit at SYS-CON’s @ThingsExpo, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. Vitria will showcase the company’s new IoT Analytics Platform through live demonstrations at booth #330. Vitria’s IoT Analytics Platform, fully integrated and powered by an operational intelligence engine, enables customers to rapidly build and operationalize advanced analytics to deliver timely business outcomes ...