HC2 Holdings in Advanced Discussions to Sell Continental Insurance, Retains Advisor to Explore Strategic Options on DBM Globa...
February 10 2020 - 7:35AM
HC2 Holdings, Inc. (“HC2” or the “Company”) (NYSE: HCHC), a
diversified holding company, today provided an update on its
strategic initiatives to monetize assets and further reduce debt by
focusing such efforts on its highest growth businesses. The
Company, following the announced sale of its Global Marine-related
assets on January 30, is also in advanced discussions for the
potential divestiture of its 100%-owned indirect subsidiaries,
Continental Insurance Group Ltd. and Continental General Insurance
Company (collectively, “Continental Insurance”). The Company
has also retained Jefferies & Co. to explore strategic options
for DBM Global Inc. (“DBM Global”), including a potential sale.
Net proceeds from any such divestitures will be used to
reduce debt at the holding company level.
“We have consistently noted that our priority is
to reduce debt at the corporate level,” said Philip Falcone,
Chairman, President and Chief Executive Officer of HC2. “We
have always believed that we have aggregated a very attractive
group of assets, but it is now time to harvest certain of these
assets to accelerate our debt reduction plan and further close the
gap between our market value and the net asset value of our
underlying portfolio companies. While we were very pleased
with the outcome of our recently announced sale of Global Marine,
it is important for us to continue down the path to meet our goals,
and I am pleased to say that ongoing discussions to sell our
wholly-owned insurance unit, Continental Insurance, have continued
to advance in a positive direction. We are proud of the value
and platform that we created at Continental, which is now well
positioned for a divestiture, having grown its Total Adjusted
Capital base from $86 million, after the 2015 acquisitions of
United Teacher Associates Insurance and Continental General, to
$334 million as of September 30, 2019.”
“Additionally, we have retained Jefferies &
Co. to pursue strategic options for our 92%-owned Construction
unit, DBM Global, including a potential sale,” added Mr.
Falcone. “DBM Global has been a stalwart portfolio company
for us since our initial acquisition of Schuff in 2014, and after
significantly growing DBM Global’s top line and adjusted EBITDA
over the past few years, we believe DBM is in a much stronger
position to begin a new chapter in its history while allowing us to
realize value for our shareholders.”
No assurances can be given that definitive
agreements for these potential divestitures will be entered into
with respect to the disposition of either Continental Insurance or
DBM Global, that any transactions will be consummated, or the
timing, terms, conditions or net proceeds thereof. The
Company does not intend to comment further on developments
regarding these potential divestiture or related market speculation
unless and until HC2 otherwise deems further disclosure is
appropriate or required.
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.
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 entering definitive agreements in
respect of the potential divestitures of Continental Insurance
and/or DBM Global, reducing debt and related interest expense at
the holding company level with the net proceeds of such
divestitures, building shareholder value, future cash flow,
longer-term growth and invested assets, and the timing or prospects
of any refinancing of HC2's remaining corporate debt. 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.
Contact:Investor Relations
Garrett Edson ir@hc2.com (212) 235-2691
HC2 (NYSE:HCHC)
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