Novatel Wireless Announces Strategic Investment from HC2
September 08 2014 - 4:15PM
Business Wire
Novatel Wireless, Inc. (NASDAQ: NVTL, the “Company”), a leading
provider of Internet of Things, today announced that it has
completed a transaction with HC2 Holdings 2, Inc. (“HC2”), a wholly
owned subsidiary of HC2 Holdings, Inc. (HCHC), for a strategic
investment in the Company. In exchange for a combination of common
stock, warrants and convertible preferred stock, HC2 will invest up
to an aggregate of approximately $23.7 million in the Company,
comprised of an initial cash investment of approximately $14.4
million, which was funded today, and up to another $9.3 million if
the warrants are exercised for cash. HC2’s initial ownership stake
in the outstanding common stock of the Company is approximately
17%. When and if the preferred stock is fully converted, HC2’s
ownership is expected to increase to approximately 18% and when and
if both the preferred stock is fully converted and the warrants are
fully exercised, HC2’s ownership stake is expected to increase to
approximately 25%, both percentages based on the Company’s current
outstanding shares. In connection with its investment, HC2 is also
entitled to certain rights under an Investors' Rights Agreement
with the Company, including Board observation rights and expected
future appointments for Philip Falcone, HC2’s Chairman, President
& CEO, and Robert Pons, its Executive Vice President – Business
Development, to the Novatel Wireless Board of Directors.
“I am very pleased to announce this agreement with HC2, which we
believe validates our vision to transition our Company and MiFi
portfolio of products into an ever increasing and exciting Internet
of Things world,” said Alex Mashinsky, CEO of Novatel Wireless.
“HC2 has a strong track record of partnering with companies to help
them accelerate their growth and realize their potential. We are
excited about the opportunity to leverage their deep experience in
wireless technology and telecommunications infrastructure to
further Novatel Wireless’ strategic and business success. We also
expect our strengthened balance sheet to positively impact our
supplier and customer relationships.”
Philip Falcone, HC2’s Chairman, President and Chief Executive
Officer, stated, “We are pleased to have acquired a minority
interest in Novatel Wireless, with its extensive experience in
wireless technologies. We look forward to working with Alex and his
management team on executing Novatel’s business plan.”
Upon the closing of this transaction, the Company issued to HC2
(a) 7,363,334 shares of its common stock at a price of $1.75 per
share, (b) 5-year warrants to purchase an additional 4,117,647
shares of common stock at an exercise price of $2.26 per share and
(c) 87,196 shares of Series C Convertible Preferred Stock at a
price of $17.50 per share, with each share being convertible into
10 shares of the Company’s common stock upon the satisfaction of
certain conditions. Beginning on December 31, 2014, and continuing
until such time as the Series C Preferred Stock is converted into
common stock or redeemed by the Company, the Series C Preferred
Stock will carry dividends at the rate of 12.5% per year.
ABOUT NOVATEL WIRELESS
Novatel Wireless, Inc. is a leader in the design and development
of intelligent wireless solutions based on 2G, 3G and 4G
technologies. The Company delivers specialized wireless solutions
to carriers, distributors, retailers, OEMs and vertical markets
worldwide. Product lines include MiFi® Intelligent Mobile Hotspots,
Ovation™ USB modems, Expedite® embedded modules, Mobile Tracking
Solutions, Asset Tracking Solutions, and Enabler smart M2M modules.
These innovative products provide anywhere, anytime communications
solutions for consumers and enterprises. Headquartered in San
Diego, California, Novatel Wireless is listed on NASDAQ: NVTL. For
more information please visit www.nvtl.com. (NVTLF)
ABOUT HC2 HOLDINGS, INC.
HC2 Holdings, Inc. operates as a holding company of operating
subsidiaries primarily in the United States and the United Kingdom.
HC2 Holdings, Inc. owns 70% of Schuff International, Inc., the
largest steel fabrication and erection company in the United
States. HC2 Holdings, Inc.’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. HC2 Holdings, Inc. owns a
majority interest in ANG Holding, Inc., a
premier retailer of compressed natural gas (CNG) motor
fuel in the United States. HC2 Holdings, Inc.’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 Holdings, Inc. is headquartered in
Herndon, Virginia. For more information, visit: www.HC2.com.
FORWARD LOOKING STATEMENTS
Certain statements in this press release may constitute
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements relate to a variety of matters, including, without
limitation, statements regarding the anticipated exercise or
conversion of the Company’s convertible securities and the
ownership stake of HC2 that is expected to result from any such
exercise or conversion, the anticipated aggregate investment to be
made by HC2, the Company’s use of the proceeds from the transaction
and other statements that are not purely statements of historical
fact. These forward-looking statements can sometimes be identified
by our use of terms such as "intend," "expect," "plan," "estimate,"
"future," "strive" and similar words. These forward-looking
statements are made on the basis of the current beliefs,
expectations and assumptions of the management of the Company and
are subject to significant risks and uncertainty. Investors are
cautioned not to place undue reliance on any such forward-looking
statements. All such forward-looking statements speak only as of
the date they are made, and the Company undertakes no obligation to
update or revise these statements, whether as a result of new
information, future events or otherwise. Although the Company
believes that the expectations reflected in these forward-looking
statements are reasonable, these statements involve many risks and
uncertainties that may cause actual results to differ materially
from what may be expressed or implied in these forward-looking
statements. For a further discussion of risks and uncertainties
that could cause actual results to differ from those expressed in
these forward-looking statements, as well as risks relating to the
business of the Company in general, see the risk disclosures in the
Company’s Annual Report on Form 10-K for the year ended December
31, 2013 and in subsequent reports on Forms 10-Q and 8-K and other
filings made with the SEC by the Company.
(C) 2014 Novatel Wireless, Inc. All rights reserved. The Novatel
Wireless name and logo are trademarks of Novatel Wireless, Inc.
Investor Contact:Novatel
WirelessThe Blueshirt GroupDavid Niederman,
415-489-2189david@blueshirtgroup.comorHC2ir@HC2.com
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