HC2 Holdings, Inc. (“HC2” or the “Company”) (NYSE: HCHC), a
diversified holding company, announced today that its Marine
Services Segment, Global Marine Group (“GMG”), a leading provider
of offshore engineering services to the telecommunications, oil
& gas, and renewables industries, has agreed to a sale of its
stake in Huawei Marine Networks Co., Limited (“HMN”), its 49% joint
venture with Huawei Technologies Co., Ltd. (“Huawei”), to Hengtong
Optic-Electric Co Ltd (“Hengtong”). The sale of GMG’s
interest values HMN at $285 million, and GMG’s 49% stake at
approximately $140 million.
Under the agreement, GMG will sell 30% of HMN to
Hengtong at closing and retain a 19% interest in HMN under a
two-year put option agreement at the greater of the same equity
value ($285mm) or fair market value. Hengtong is also
purchasing Huawei’s full 51% stake and will own 81% of the joint
venture upon the closing of both sales, and 100% upon the exercise
of GMG’s put option. Completion of the sale is expected
during the first quarter of 2020, subject to customary closing
conditions, with proceeds delivered to GMG at that time.
After satisfaction of any pending obligations and in concert with
any sale of Global Marine Systems Limited (“GMSL”), HC2’s share of
the net proceeds from the HMN sale will be utilized to reduce debt
at the HC2 holding company level.
“We are very pleased at the outcome of the joint
venture sales process,” said Philip Falcone, Chairman, President
and Chief Executive Officer of HC2. “We want to thank our
partners at Huawei, with whom we have had a great working
relationship since our acquisition of GMG five years ago, for
successfully growing the joint venture and completing over 98
projects globally since inception. Inking this deal now
further sets the stage for a potential sale of GMG, including the
main operating subsidiary, Global Marine Systems Limited, which
continues to be a top priority for us as we close out 2019.”
About HC2
HC2 Holdings, Inc. is a publicly traded
(NYSE:HCHC) diversified holding company, which seeks opportunities
to acquire and grow businesses that can generate long-term
sustainable free cash flow and attractive returns in order to
maximize value for all stakeholders. HC2 has a diverse array
of operating subsidiaries across eight reportable segments,
including Construction, Marine Services, Energy,
Telecommunications, Life Sciences, Broadcasting, Insurance and
Other. HC2’s largest operating subsidiaries include DBM
Global Inc., a family of companies providing fully integrated
structural and steel construction services, and Global Marine
Systems Limited, a leading provider of engineering and underwater
services on submarine cables. Founded in 1994, HC2 is headquartered
in New York, New York. Learn more about HC2 and its portfolio
companies at www.hc2.com.
About the Marine Services Segment and
Global Marine GroupThe Marine Services Segment operates
under the platform Global Marine Group (“GMG”), which includes
Global Marine Systems Limited (“GMSL”), an operating subsidiary of
HC2 Holdings Inc. (NYSE: HCHC). GMG is a market leader in offshore
engineering and is recognized as a high quality, independent
strategic partner across multiple sectors. GMG consists of three
business units; Global Marine, providing fibre optic cable
solutions to the telecommunications and oil & gas markets,
CWind, delivering power cable and asset management services topside
and subsea, to the offshore renewables and utilities markets, and
Global Offshore, delivering the Company’s trenching and power cable
laying capabilities within the oil & gas sector.
GMG has three successful joint ventures,
including two in China, SBSS and HMN, demonstrating the true global
reach of the Company. Additionally, CWind Taiwan was formed in 2018
addressing the needs of the fast-growing offshore renewable sector
in Asia. The combined experience and knowledge has led to
significant embedded intellectual property and an enviable track
record.
GMG has an outstanding record in health &
safety and proudly hold the RoSPA Order of Distinction, following
19 consecutive years’ of receiving their Gold Standard in
recognition of outstanding occupational health & safety
standards.
GMG is in a unique position, owning the world’s
largest independent marine contracting fleet including two
specialist cable installation and repair vessels, four maintenance
vessels and 19 owned CTVs. Additionally, the company has a
diverse range of subsea equipment including eight trenchers and
working class ROVs.
GMG boasts a number of industry achievements,
from installing the first subsea cable in 1850, being part of the
consortium that invented the universal joint, and right through to
today, finding solutions for client challenges such as low carbon
crew transfer vessels for offshore wind farms.
GMG aspires to achieve its vision ‘Engineering a
clean and connected future’.
For more information about GMG, GMSL, CWind and
Global Offshore, please visit our websites at
www.globalmarine.group, www.globalmarine.co.uk,
www.cwind.global and www.globaloffshore.co.uk.
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.
Generally, forward-looking statements include information
describing actions, events, results, strategies and expectations
and are generally identifiable by use of the words “believes,”
“expects,” “intends,” “anticipates,” “plans,” “seeks,” “estimates,”
“projects,” “may,” “will,” “could,” “might,” or “continues” or
similar expressions. The forward-looking statements in this press
release include, without limitation, any statements regarding our
expectations regarding building shareholder value and future cash
flow and invested assets. Such statements are based on the
beliefs and assumptions of HC2's management and the management of
HC2's subsidiaries and portfolio companies. The Company
believes these judgments are reasonable, but you should understand
that these statements are not guarantees of performance or results,
and the Company’s actual results could differ materially from those
expressed or implied in the forward-looking statements due to a
variety of important factors, both positive and negative, that may
be revised or supplemented in subsequent statements and reports
filed with the Securities and Exchange Commission (“SEC”),
including in our reports on Forms 10-K, 10-Q, and 8-K. Such
important factors include, without limitation, issues related to
the restatement of our financial statements; the fact that we have
historically identified material weaknesses in our internal control
over financial reporting, and any inability to remediate future
material weaknesses; capital market conditions, including the
ability of HC2 and HC2's subsidiaries to raise capital; the ability
of HC2's subsidiaries and portfolio companies to generate
sufficient net income and cash flows to make upstream cash
distributions; volatility in the trading price of HC2 common stock;
the ability of HC2 and its subsidiaries and portfolio companies to
identify any suitable future acquisition or disposition
opportunities; our ability to realize efficiencies, cost savings,
income and margin improvements, growth, economies of scale and
other anticipated benefits of strategic transactions; difficulties
related to the integration of financial reporting of acquired or
target businesses; difficulties completing pending and future
acquisitions and dispositions; effects of litigation,
indemnification claims, and other contingent liabilities; changes
in regulations and tax laws; and risks that may affect the
performance of the operating subsidiaries and portfolio companies
of HC2. Although HC2 believes its expectations and
assumptions regarding its future operating performance are
reasonable, there can be no assurance that the expectations
reflected herein will be achieved. These risks and other
important factors discussed under the caption “Risk Factors” in our
most recent Annual Report on Form 10-K filed with the SEC, and our
other reports filed with the SEC could cause actual results to
differ materially from those indicated by the forward-looking
statements made in this press release.
You should not place undue reliance on
forward-looking statements. All forward-looking statements
attributable to HC2 or persons acting on its behalf are expressly
qualified in their entirety by the foregoing cautionary statements.
All such statements speak only as of the date made, and
unless legally required, HC2 undertakes no obligation to update or
revise publicly any forward-looking statements, whether as a result
of new information, future events or otherwise.
There can be no assurance that the HMN
transaction will be completed as proposed or at all, or that the
exploration of any other strategic alternative, including a
potential sale of GMG, will result in a consummated transaction or
other alternative. Neither HC2 nor GMG has set a timetable
for completion of the process, and neither intends to comment
further regarding the process unless a specific transaction or
other alternative is approved by their respective Boards of
Directors, the process is concluded or it is otherwise determined
that further disclosure is appropriate or required by law.
Contact:Investor Relations
Garrett Edsonir@hc2.com (212) 235-2691
HC2 (NYSE:HCHC)
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