INNOVATE Corp. Announces Rights Offering for Common Stock
February 26 2024 - 8:00AM
INNOVATE Corp. (“INNOVATE” or the “Company”) (NYSE: VATE), a
diversified holding company, announced today that its Board of
Directors (the “Board”) has approved a plan to proceed with and
fixed a record date for an $19.0 million rights offering for its
common stock.
All INNOVATE stockholders will have the
opportunity to participate in the offering and subscribe for their
basic subscription amount of newly issued shares of common stock in
proportion to their respective existing ownership amounts. INNOVATE
stockholders who exercise their respective full basic subscription
rights will have over-subscription privileges giving such INNOVATE
stockholders the option to subscribe for any shares of common stock
that remain unsubscribed at the expiration of the rights offering.
If the aggregate subscriptions (basic subscriptions plus
over-subscriptions) exceed the amount offered in the rights
offering, then the aggregate over-subscription amount will be
pro-rated among the stockholders exercising their respective
over-subscription privileges based on the basic subscription
amounts of such stockholders.
The Company will distribute to each holder of
the Company’s common stock as of March 6, 2024 (the “rights
offering record date”), one transferable subscription right to
purchase shares of the Company’s common stock at a price to be
determined prior to commencement of the rights offering. Holders of
the Company’s existing preferred stock and convertible notes that
are entitled to participate in dividend distributions to holders of
the Company’s common stock will also be entitled to participate in
the rights offering. The offering will expire at 5:00 PM Eastern
Time on March 25, 2024, unless extended by the Company. The Company
expects to mail subscription rights certificates evidencing the
rights and a copy of the prospectus supplement for the offering to
record date stockholders beginning on March 8, 2024.
The rights offering will be backstopped by
Lancer Capital LLC (“Lancer Capital”), an investment fund led by
Avram A. Glazer, the Chairman of the Board and the Company’s
largest stockholder. Lancer Capital will not be permitted to
exercise or transfer any subscription rights received by it, or to
acquire other rights, in the rights offering, which rights are
required to be held by Lancer Capital until the expiration thereof.
Due to limitations of common stock that can be acquired by Lancer
Capital, in lieu of exercising its subscription rights, Lancer
Capital will purchase up to $19.0 million of the Company’s newly
issued Series C Non-Voting Participating Convertible Preferred
Stock (the “Preferred Stock”), for an issue price of $1,000 per
share. In connection with the backstop commitment, and as a result
of limitations in the amount common equity that can be raised under
the Company’s effective shelf registration statement on Form S-3,
Lancer Capital will also agree to purchase an additional $16.0
million of Preferred Stock in a private placement transaction to
close concurrently with the settlement of the rights offering. The
Preferred Stock terms will include a liquidation preference junior
to the Company’s existing preferred stock and equal to the
Company’s common stock (other than a preference of $0.001 per share
of Preferred Stock that will be paid to the holders of the
Preferred Stock before any payment or distribution is made to the
holders of the common stock).
If for any reason the settlement of the rights
offering does not occur by March 29, 2024, then on that date Lancer
Capital will purchase $25.0 million of Preferred Stock and, upon
the settlement of the Rights Offering, to the extent that Lancer
Capital would have, based on the number of shares of common stock
actually sold upon exercise of the rights, purchased less than
$25.0 million of Convertible Preferred Stock under the backstop
commitment and the concurrent private placement, the Company will
redeem such excess Preferred Stock from Lancer Capital at the
redemption price of $1,000 per share.
The Preferred Stock can be convertible into
common stock at the price equivalent to the subscription price
under the rights offering contingent on shareholder approval, which
will be voted on at the next annual meeting. If the Preferred Stock
is not converted to common stock, it may be redeemed at the
Company’s option or on the sixth anniversary of issuance plus
accrued interest of 8% which is only due upon redemption and not
conversion.
Lancer Capital’s backstop commitment and the
concurrent private placement will be effected in the manner set
forth in an investment agreement to be entered into with the
Company in connection with the commencement of the rights offering,
a copy of which will be filed by the Company with the SEC.
The Company has waived its Tax Benefit
Preservation Plan to permit persons exercising rights to acquire
4.9% or more of the outstanding common stock upon the exercise
thereof without becoming an Acquiring Person (as defined in the Tax
Benefit Preservation Plan).
INNOVATE expects to use the proceeds from the rights offering
for general corporate purposes.
The rights offering will be made
pursuant to INNOVATE’s effective shelf registration statement on
Form S-3, filed with the SEC on September 29, 2023 and declared
effective on October 6, 2023, and a prospectus supplement
containing the detailed terms of the rights offering to be filed
with the SEC. The information in this
press release is not complete and is subject to change. This press
release shall not constitute an offer to sell or a solicitation of
an offer to buy any securities (including without limitation the
Preferred Stock to be issued and sold in the concurrent private
placement), nor shall there be any offer, solicitation or sale of
the securities in any state or jurisdiction in which such offer,
solicitation or sale would be unlawful under the securities laws of
such state or jurisdiction. The rights offering will be made only
by means of a prospectus and a related prospectus
supplement. Copies of the prospectus and
related prospectus supplement, when they become available, will be
distributed to all eligible stockholders as of the rights offering
record date and may also be obtained free of charge at the website
maintained by the SEC
at www.sec.gov or by
contacting the information agent for the rights
offering.
The Preferred Stock to be issued to
Lancer Capital pursuant to the backstop commitment and the
concurrent private placement will not be registered under the Act
and may not be offered or sold in the United States absent
registration or an applicable exemption from registration
requirements.
About INNOVATE
INNOVATE Corp. is a portfolio of
best-in-class assets in three key areas of the new economy –
Infrastructure, Life Sciences and Spectrum. Dedicated to
stakeholder capitalism, INNOVATE employs approximately 4,000 people
across its subsidiaries. For more information, please
visit: www.INNOVATECorp.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 regarding
the proposed rights offering and concurrent private placement,
including, among others, statements related to the expected timing,
eligible offerees, backstop purchasers and expectations
regarding participation in the rights offering, the use of
proceeds from the rights offering, the size of the rights offering
and other terms of the rights offering, all of which involve risks,
assumptions and uncertainties, many of which are outside of the
Company's control, and are subject to change. The commencement and
consummation of the rights offering are also subject to customary
conditions, including declaration by the Board of the dividend
constituting the rights to be issued in the rights offering and
market conditions. Accordingly, no assurance can be given that the
rights offering or concurrent private placement will be consummated
on the terms described above or at all. All forward-looking
statements speak only as of the date made, and unless legally
required, INNOVATE undertakes no obligation to update or revise
publicly any forward-looking statements, whether as a result of new
information, future events or otherwise.
Contact:
Solebury Strategic CommunicationsAnthony
Rozmusir@innovatecorp.com(212) 235-2691
INNOVATE (NYSE:VATE)
Historical Stock Chart
From Jul 2024 to Aug 2024
INNOVATE (NYSE:VATE)
Historical Stock Chart
From Aug 2023 to Aug 2024