$95 million Convertible
Preference Shares Investment Strengthens MDC Partners' Balance
Sheet
$10 Conversion Price
Represents a 48% Premium to the 30-day Average Closing Price of
$6.75 Per Share
NEW YORK, Feb. 15, 2017 /PRNewswire/ -- (NASDAQ:
MDCA) -- MDC Partners Inc. ("MDC Partners" or the
"Company") today announced that it has entered into a definitive
agreement with an affiliate of the Merchant Banking Division of
Goldman Sachs ("Goldman Sachs") pursuant to which Goldman Sachs has
agreed to invest $95 million in MDC
Partners through the purchase of non-voting convertible preference
shares (the "Preference Shares"). In connection with the
closing of the transaction, Bradley J.
Gross, a managing director in the Merchant Banking Division
of Goldman Sachs, will join the MDC Partners Board of Directors,
which will expand to seven members. Subject to the
satisfaction of certain conditions, the transaction is expected to
close in the first quarter of 2017.
Scott L. Kauffman, Chairman and
Chief Executive Officer of MDC Partners, said, "We are extremely
pleased to be partnering with Goldman Sachs. Their investment
in MDC affirms the value of our world-class agency portfolio,
strengthens our balance sheet, and validates a solid finish to 2016
and our prospects going forward. Brad and his team bring an
exceptional track record and important expertise to our continued
pursuit of maximizing long-term shareholder value."
Bradley J. Gross, Managing
Director of Goldman Sachs, said, "We are excited to partner with
MDC to help drive growth and innovation in the marketing and
communications industry. The MDC partner agencies are market
leaders with strong reputations and a demonstrated history of
serving their clients. We look forward to working with Scott and
his team to further position the company for long term growth."
Upon completion of the transaction, Goldman Sachs will own
approximately 15% of the outstanding equity of the Company,
assuming the full conversion of the Preference Shares into the
Company's Class A common shares (the "Class A Shares"). The
Preference Shares will have a liquidation preference that accretes
at a rate of 8.0% per annum, compounded quarterly until the
five-year anniversary of the issuance date of the Preference
Shares.
The Preference Shares will be convertible at the option of the
holder into Class A Shares at an initial conversion price of
$10.00 per Preference Share (subject
to customary adjustments for share splits and combinations,
dividends, recapitalizations and other matters), which represents a
48% premium to the 30-day average closing price of $6.75 per Class A Share. The Company may force
conversion of the Preference Shares into Class A Shares after two
years if the Class A Shares close at or above 125% of the
then-applicable conversion price for at least 30 consecutive
trading days, and after five years if the Class A Shares close at
or above 100% of the then-applicable conversion price for at least
30 consecutive trading days.
MDC Partners expects to use the net proceeds from the investment
to pay down existing debt under the Company's credit facility and
for general corporate purposes.
LionTree Advisors acted as lead advisor in connection with their
previously-announced engagement to conduct a comprehensive review
of the Company's financial and capital structure, which is now
concluded. LionTree and JPMorgan acted as financial advisors to the
Company on this transaction.
About MDC Partners Inc.
MDC Partners is one of the fastest-growing and most influential
marketing and communications networks in the world. Its 50+
advertising, public relations, branding, digital, social and event
marketing agencies are responsible for some of the most memorable
and engaging campaigns for the world's most respected brands.
As "The Place Where Great Talent Lives," MDC Partners is known for
its unique partnership model, empowering the most entrepreneurial
and innovative talent to drive competitive advantage and business
growth for clients. By leveraging technology, data analytics,
insights, and strategic consulting solutions, MDC Partners drives
measurable results and optimizes return on marketing investment for
over 1,700 clients worldwide. For more information about MDC
Partners and its partner firms, visit our website at
www.mdc-partners.com and follow us on Twitter at
http://www.twitter.com/mdcpartners.
About Goldman Sachs' Merchant Banking Division
Founded in 1869, The Goldman Sachs Group, Inc., is a leading
global investment banking, securities and investment management
firm. Goldman Sachs' Merchant Banking Division (MBD) is the primary
center for the firm's long-term principal investing activity. With
nine offices across seven countries, MBD is one of the leading
private capital investors in the world with equity and credit
investments across corporate, real estate, and infrastructure
strategies. Since 1986, the group has invested approximately
$180 billion of levered capital
across a number of geographies, industries and transaction
types.
This press release contains forward-looking statements. The
Company's representatives may also make forward-looking statements
orally from time to time. Statements in this press release that are
not historical facts, including statements about the Company's
beliefs and expectations, earnings guidance, recent business and
economic trends, potential acquisitions, and estimates of amounts
for redeemable noncontrolling interests and deferred acquisition
consideration, constitute forward-looking statements. These
statements are based on current plans, estimates and projections,
and are subject to change based on a number of factors, including
those outlined in this section. Forward-looking statements
speak only as of the date they are made, and the Company undertakes
no obligation to update publicly any of them in light of new
information or future events, if any.
Forward-looking statements involve inherent risks and
uncertainties. A number of important factors could cause
actual results to differ materially from those contained in any
forward-looking statements. Such risk factors include, but are not
limited to, the following:
- the successful completion of the Goldman Sachs investment on
the anticipated terms and conditions;
- risks associated with severe effects of international,
national and regional economic downturn;
- the Company's ability to attract new clients and retain
existing clients;
- the spending patterns and financial success of the Company's
clients;
- the Company's ability to retain and attract key
employees;
- the Company's ability to remain in compliance with its debt
agreements and the Company's ability to finance its contingent
payment obligations when due and payable, including but not limited
to those relating to redeemable noncontrolling interests and
deferred acquisition consideration;
- the successful completion and integration of acquisitions
which complement and expand the Company's business
capabilities;
- risks related to the Company's class action litigation
claims; and
- foreign currency fluctuations.
The Company's business strategy includes ongoing efforts to
engage in acquisitions of ownership interests in entities in the
marketing communications services industry. The Company
intends to finance these acquisitions by using available cash from
operations, from borrowings under its credit facility and through
incurrence of bridge or other debt financing, any of which may
increase the Company's leverage ratios, or by issuing equity, which
may have a dilutive impact on existing shareholders proportionate
ownership. At any given time the Company may be engaged in a
number of discussions that may result in one or more
acquisitions. These opportunities require confidentiality and
may involve negotiations that require quick responses by the
Company. Although there is uncertainty that any of these
discussions will result in definitive agreements or the completion
of any transactions, the announcement of any such transaction may
lead to increased volatility in the trading price of the Company's
securities.
Investors should carefully consider these risk factors and
the additional risk factors outlined in more detail in the Annual
Report on Form 10-K under the caption "Risk Factors" and in the
Company's other SEC filings.
CONTACT:
|
Matt Chesler,
CFA
|
|
VP, Investor
Relations
|
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646-412-6877
|
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mchesler@mdc-partners.com
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SOURCE MDC Partners Inc.