NEW YORK, Nov. 9, 2016 /CNW/ -- (NASDAQ: MDCA) –
MDC Partners Inc. ("MDC Partners" or the "Company") announced
today that it has reached an agreement in principle to resolve the
ongoing investigation by the Securities and Exchange Commission
(the "SEC"). The SEC Commissioners must still approve the proposed
framework agreement, which was reached with the Philadelphia
Regional Office of the SEC, and therefore the terms are not
final.
The Company first announced the SEC investigation on
April 27, 2015, as well as subsequent
actions taken as part of an internal investigation, including the
resignation by Miles Nadal, the
Company's former Chairman and Chief Executive Officer. As a
result of the investigation, Mr. Nadal agreed to fully repay the
Company for improper expenses incurred in an aggregate amount of
$11,285,000, together with an amount
equal to $10,581,605 in respect of
prior cash bonus awards.
Under the proposed framework agreement, the Company is not
admitting liability. The Company would agree to entry of a cease
and desist order that it not violate Section 17(a)(2) of the
Securities Act of 1933 and Sections 13(a), 13(b) and 14(a) of
the Securities Exchange Act of 1934 and related rules requiring
that periodic filings be accurate (including Regulation G), that
accurate books and records and a system of internal accounting
controls be maintained and that solicitations of proxies comply
with the securities laws, which the SEC Staff has concluded MDC
unintentionally violated. In addition, the Company would pay a
$1.5 million civil penalty to the SEC
to resolve all potential claims by the SEC against the Company
relating to these matters. There will be no restatement of any of
the Company's previously-filed financial statements.
Scott L. Kauffman, the Company's
Chairman and Chief Executive Officer, stated that "We are extremely
pleased that this matter is on its way towards final resolution for
the Company and our stakeholders." Mr. Kauffman added, "We
greatly appreciate that the Philadelphia Regional Office of the SEC
recognized our high level of cooperation and the extensive internal
investigation conducted by the Company's Special Committee and
outside counsel, as well as the self-initiated remedial measures
implemented in connection with new policies and procedures."
MDC Partners understands that the SEC will continue its
investigation of certain persons who previously served as executive
officers of the Company.
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, media, 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 www.mdc-partners.com and follow us on Twitter:
http://www.twitter.com/mdcpartners.
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 expected terms
of the Company's proposed settlement agreement with the SEC,
constitute forward-looking statements. These statements are
based on current discussions, 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 finalization of a formal settlement agreement with the
SEC consistent with the proposed framework;
- the class action securities litigation claims;
- 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;
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.