Holders entitled to up to 12% dividends depending on net asset value
By Angela McDaniels
Tacoma, Wash., May 13 - Harbinger Group Inc. sold $280 million of series A participating convertible cumulative preferred stock in a private placement, according to an 8-K filing with the Securities and Exchange Commission.
The investors are CF Turul LLC, Providence TMT Debt Opportunity Fund II, LP, PECM Strategic Funding LP and Wilton Re Holdings Ltd.
Dividends are payable quarterly at the rate of 8% per year. Holders are entitled to additional dividends that depend on the company's net asset value, which equals the sum of its cash equivalents plus the fair market value of its investments less its liabilities. The additional dividend rate is 4% if the net asset value on the last day of the dividend period is less than 120% of the net asset value on the pricing date, 2% if the net asset value is 120% to 140% of the original net asset value and zero if the net asset value is greater than 140% of the original net asset value.
Holders are also entitled to participate in cash and in-kind distributions to holders of the company's common stock on an as-converted basis.
The preferreds are convertible into common stock at a conversion price of $6.50, which is a 12% premium to the company's 30-day volume-weighted average price and a 1.25% premium to its $6.42 closing share price on May 11.
After three years, the convertibles are callable at any time at 150% of par, and the company can force conversion if the 30-day VWAP of its common stock and the daily VWAP exceed 150% of the conversion price for at least 20 trading days out of 30.
On the seventh anniversary of the settlement date, holders can put back their convertibles at par. Any convertibles not put back will be automatically converted into common stock.
Proceeds will be used for general corporate purposes, which may include acquisitions and other investments.
Harbinger is a New York-based holding group for subsidiaries Spectrum Brands Holdings, Inc., a branded consumer products company, and Fidelity & Guaranty Life Insurance Co., a life insurance and annuity company.
| Issuer: | Harbinger Group Inc.
|
| Issue: | Series A participating convertible cumulative preferred stock
|
| Amount: | $280 million
|
| Shares: | 280,000
|
| Price: | $1,000
|
| Dividends: | 8%, payable quarterly; additional 2% or 4% possible depending on company's net asset value
|
| Conversion price: | $6.50
|
| Conversion ratio: | 153.84615
|
| Conversion premium: | 1.25%
|
| Put option: | On May 13, 2018; any preferreds not put back will be automatically converted
|
| Call option: | At any time at 150% of par beginning three years after issuance
|
| Warrants: | No
|
| Investors: | CF Turul LLC, Providence TMT Debt Opportunity Fund II, LP, PECM Strategic Funding LP and Wilton Re Holdings Ltd.
|
| Pricing date: | May 12
|
| Settlement date: | May 13
|
| Stock symbol: | NYSE: HRG
|
| Stock price: | $6.32 at close May 12
|
| Market capitalization: | $900.63 million
|
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