INNOVATE Corp. (“INNOVATE” or the “Company”) (NYSE: VATE), a
diversified holding company, announced today that it has commenced
its previously announced $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 is distributing to each holder of
the Company’s common stock as of 5:00 p.m., New York time, March 6,
2024 (the “rights offering record date”), one transferable
subscription right to purchase 0.2858 shares of the Company’s
common stock at a price of $0.70 per whole share for each share of
the Company’s common stock held as of the rights offering record
date. 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 are also
entitled to participate in the rights offering.
The rights offering is being 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 of common equity that can be raised
under the Company’s effective shelf registration statement on Form
S-3, Lancer Capital has agreed 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 28, 2024, then on that date Lancer
Capital will purchase $25.0 million of Preferred Stock. 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 and must be mandatorily redeemed on the
sixth anniversary of issuance, in each case at a cash redemption
price per share of $1,000 plus accrued, uncompounded interest of 8%
per annum, which is due only upon redemption and not on
conversion.
The investment agreement includes customary
standstill provisions that restrict the ability of Lancer Capital
and its affiliates from, among other things, acquiring (i) our
equity securities that would result in having beneficial ownership
of more than that percentage of the then-outstanding common stock
beneficially owned immediately following the closing of the rights
offering, (ii) equity securities of our subsidiaries or (iii) any
debt securities or indebtedness of us or our subsidiaries until 90
days after the closing of the rights offering.
Lancer Capital’s backstop commitment and the
concurrent private placement will be effected in the manner set
forth in the investment agreement entered into with the Company in
connection with the commencement of the rights offering, a copy of
which has been filed by the Company with the SEC.
The offering will expire at 5:00 PM Eastern Time
on March 25, 2024, unless extended by the Company. Trading in the
rights will cease at 5:00 PM Eastern Time on March 20, 2024. The
Company reserves the right to amend or terminate the rights
offering at any time prior to its expiration date.
The shares of common stock to be issued upon
exercise of the rights, like the Company's existing shares of
common stock, will be listed for trading on the New York Stock
Exchange (the “NYSE”) under the symbol “VATE.”
The Company expects that the information agent
for the rights offering will mail rights certificates and a copy of
the prospectus and prospectus supplement for the rights offering to
stockholders as of the rights offering record date beginning on or
about March 8, 2024. Holders of shares of common stock in “street
name” through a brokerage account, bank or other nominee will not
receive physical rights certificates and must instruct their
broker, bank or nominee whether to exercise subscription rights on
their behalf. For any questions or further information about the
rights offering, please call Okapi Partners LLC, the information
agent for the rights offering, at (855) 208-8902 (toll-free).
Neither the Company nor its Board of Directors
has, or will, make any recommendation to stockholders regarding the
exercise or sale of rights in the rights offering. Stockholders
should make an independent investment decision about whether or not
to exercise or sell their rights based on their own assessment of
the Company’s business and the rights offering.
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
Securities Act of 1933, as amended, 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. 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
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