Steel Partners Holdings L.P. (NYSE: SPLP), a diversified global
holding company (“Steel Partners”) and Steel Connect, Inc. (NASDAQ:
STCN) (“Steel Connect”) today announced that Steel Partners and
certain of its affiliates (the “Steel Partners Group”) have
transferred certain marketable securities held by the Steel
Partners Group to Steel Connect in exchange for 3.5 million shares
of Series E Convertible Preferred Stock of Steel Connect (the
“Preferred Stock”, and, such transfer and related transactions, the
“Transaction”). Upon approval by the Steel Connect stockholders
pursuant to NASDAQ Marketplace Rules, the Preferred Stock will be
convertible into an aggregate of 184,891,318 shares of Steel
Connect common stock, and will vote together with the Steel Connect
common stock and participate in any dividends paid on the Steel
Connect common stock, in each case on an as-converted basis. Upon
conversion of the Preferred Stock, the Steel Partners Group would
hold approximately 85.12% of the outstanding equity interests of
Steel Connect. Steel Partners and certain of its affiliates which
currently hold more than 50% of the voting power in Steel Connect
have agreed to vote in favor of the stockholder proposal relating
to the Preferred Stock.
The purpose of the Transaction is to provide Steel Connect with
access to approximately $200 million of new capital which will be
used for working capital, complementary and strategic acquisitions
and general corporate purposes.
Steel Connect and Steel Partners also entered into a
Stockholders’ Agreement on April 30, 2023 that includes, among
other things, provisions relating to certain governance and voting
matters following the closing of the Transaction.
Steel Connect will call a stockholders’ meeting to consider and
vote upon the rights of the Preferred Stock to vote and receive
dividends together with the Steel Connect common stock on an
as-converted basis and the issuance of Steel Connect common stock
upon conversion of the Preferred Stock by the holders at their
option (the “Stockholder Proposal”).
Steel Connect’s Board of Directors, acting on the unanimous
recommendation of the Strategic Planning Committee of the Board of
Directors, approved the Transaction. The Steel Connect Board
initiated a strategic alternatives process in January 2023 with the
formation of a Strategic Planning Committee, comprised solely of
independent and disinterested members of the Board. After careful
consideration, the Strategic Planning Committee unanimously
determined that the Transaction is in the best interests of Steel
Connect and its stockholders. The Strategic Planning Committee
exclusively negotiated the terms of the Transaction with Steel
Partners, with the assistance of its independent legal counsel and
financial advisor.
Additional information regarding the securities described above
and the terms of the Transaction are included in a Current Report
on Form 8-K to be filed with the United States Securities and
Exchange Commission (“SEC”).
The Preferred Stock, and shares of common stock into which the
shares of Preferred Stock are convertible, are being issued in
reliance upon the exemption from the securities registration
afforded by Section 4(a)(2) of the Securities Act of 1933, as
amended.
This press release shall not constitute an offer to sell or a
solicitation of an offer to buy these securities, nor shall there
be any sale of these securities in any state or other jurisdiction
in which such offer, solicitation or sale would be unlawful prior
to the registration or qualification under the securities laws of
any such state or other jurisdiction.
Advisors
Houlihan Lokey is serving as the financial advisor to the
Strategic Planning Committee of Steel Connect, and Imperial Capital
is serving as the financial advisor to Steel Partners. Dentons US
LLP is serving as legal counsel to the Strategic Planning Committee
and White & Case LLP is serving as legal counsel to Steel
Connect. Greenberg Traurig, LLP is serving as legal counsel to
Steel Partners.
About Steel Partners Holdings L.P.
Steel Partners Holdings L.P. is a diversified global holding
company that owns and operates businesses and has significant
interests in leading companies in various industries, including
diversified industrial products, energy, defense, supply chain
management and logistics, banking and youth sports.
About Steel Connect, Inc.
Steel Connect, Inc. is a holding company whose wholly-owned
subsidiary, ModusLink Corporation, serves the supply chain
management markets.
Additional Information and Where to Find It
This communication may be deemed to be solicitation material in
respect of obtaining approval of the Stockholder Proposal (the
“Stockholder Approval”). In connection with obtaining the
Stockholder Approval, Steel Connect will file with the SEC and
furnish to Steel Connect’s stockholders a proxy statement and other
relevant documents. This communication does not constitute a
solicitation of any vote or approval. BEFORE MAKING ANY VOTING
DECISION, STEEL CONNECT’S STOCKHOLDERS ARE URGED TO READ THE PROXY
STATEMENT IN ITS ENTIRETY WHEN IT BECOMES AVAILABLE AND ANY OTHER
DOCUMENTS TO BE FILED WITH THE SEC IN CONNECTION WITH THE
STOCKHOLDER APPROVAL OR INCORPORATED BY REFERENCE IN THE PROXY
STATEMENT BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE
TRANSACTION.
Investors will be able to obtain a free copy of the proxy
statement, when available, and other relevant documents filed by
Steel Connect with the SEC at the SEC’s website at www.sec.gov. In
addition, investors may obtain a free copy of the proxy statement,
when available, and other relevant documents from Steel Connect’s
website at www.steelconnectinc.com or by directing a request to
Steel Connect, Inc., Attn: Chief Financial Officer, 590 Madison
Avenue, 32nd Floor, New York, New York 10022 or by calling (212)
520-2300.
Participants in the Solicitation
Steel Connect and its directors, executive officers and certain
other members of management and employees of Steel Connect may be
deemed to be “participants” in the solicitation of proxies from the
stockholders of Steel Connect in connection with the Stockholder
Approval. Information regarding the interests of the persons who
may, under the rules of the SEC, be considered participants in the
solicitation of the stockholders of Steel Connect in connection
with the Stockholder Approval, which may be different than those of
Steel Connect’s stockholders generally, will be set forth in the
proxy statement and the other relevant documents to be filed with
the SEC. Stockholders can find information about Steel Connect and
its directors and executive officers and their ownership of Steel
Connect’s Common Stock in Steel Connect’s Annual Report on Form
10-K, filed with the SEC on November 9, 2022, and amended on
November 28, 2022, and additional information about the ownership
of Steel Connect’s Common Stock by Steel Connect’s directors and
executive officers is included in their Forms 3, 4 and 5 filed with
the SEC.
Forward-Looking Statements
This communication contains certain forward-looking statements
that involve a number of risks and uncertainties. This
communication contains forward-looking statements related to Steel
Connect, Steel Partners and the Transaction. Actual results and
events in future periods may differ materially from those expressed
or implied by these forward-looking statements because of a number
of risks, uncertainties and other factors. All statements other
than statements of historical fact, including statements containing
the words “aim,” “anticipate,” “are confident,” “estimate,”
“expect,” “will be,” “will continue,” “will likely result,”
“project,” “intend,” “plan,” “believe” and other words and terms of
similar meaning, or the negative of these terms, are statements
that could be deemed forward-looking statements. Risks,
uncertainties and other factors include, but are not limited to:
(i) the occurrence of any event, change or other circumstances that
could give rise to the termination of the exchange agreement
entered into in connection with the Transaction; (ii) the inability
to complete the Transaction due to the failure to satisfy the
conditions to completion of the Transaction; (iii) the value of the
marketable securities being exchanged and the ability of Steel
Connect to use such additional capital to satisfy its working
capital needs and to implement its strategic objectives or and
(iii) the outcome of any legal proceedings, regulatory proceedings
or enforcement matters that may be instituted against Steel
Partners and Steel Connect and others relating to the Transaction.
Consider these factors carefully in evaluating the forward-looking
statements.
The forward-looking statements included in this press release
are made only as of the date of this release, and except as
otherwise required by federal securities law, neither Steel
Partners nor Steel Connect assume any obligation nor do they intend
to publicly update or revise any forward-looking statements to
reflect subsequent events or circumstances.
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version on businesswire.com: https://www.businesswire.com/news/home/20230501005281/en/
Jennifer Golembeske 212-520-2300
Steel Partners (NYSE:SPLP)
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