The Global Marine Group is extremely pleased to announce that an agreement has been reached between HC2 and J.F. Lehman & Company with regards to the 100% sale of the company. The transaction is subject to customary closing conditions being met, and is expected to close by the end of the first quarter of 2020.
NEW YORK, Jan. 30, 2020 (GLOBE NEWSWIRE) — HC2 Holdings, Inc. (“HC2” or the “Company”) (NYSE: HCHC), a diversified holding company, announced today that a subsidiary of Global Marine Holdings, LLC, in which HC2 holds an approximate 73% equity interest, has entered into a definitive agreement to sell 100% of Global Marine Group (“GMG”) to an investment affiliate of J.F. Lehman & Company, LLC (“JFLCO”). The sale includes GMG’s operating subsidiary Global Marine Systems Limited, a leading provider of offshore engineering services to the telecommunications, renewables, and oil & gas industries, along with several joint ventures, and excludes the previously announced sale of GMG’s 49% joint venture with Huawei Marine Networks Co., Limited (“HMN”).
Total base consideration for 100% of GMG (excluding HMN) will be approximately $250 million in cash, subject to customary closing adjustments, plus a potential future earn-out should JFLCO and its investment affiliates achieve a specified multiple of their invested capital. Combined with the previously announced sale of GMG’s stake in HMN at a valuation of $140 million (of which approximately $85 million will be paid at closing, currently scheduled in the first quarter of 2020, with the remaining interest under a two-year put option), the total valuation for HC2’s Marine Services Segment (73% owned by HC2) is $390 million.
The GMG transaction is expected to close by the end of the first quarter of 2020, subject to customary closing conditions, with proceeds delivered to HC2 at that time. After repayment of approximately $97 million of pension and debt obligations at GMG, as well as other customary closing adjustments, taxes and transaction fees, HC2 will utilize the net proceeds it receives from the consummation of both the GMG and HMN sales to redeem a portion of HC2’s 11.5% Senior Secured Notes (the “11.5% Notes”) due 2021. The partial redemptions are expected to occur by the end of the second quarter of 2020.
Post-sale, the remaining 19% interest in HMN that is under a two-year put option agreement will remain as an indirect subsidiary of HC2.
“We are energized to start off 2020 with the completion of the sale process, and there is no question that our patience and persistence has been rewarded with a very strong outcome for HC2 stakeholders,” said Philip Falcone, Chairman, President and Chief Executive Officer of HC2. “Over the last five years, we have built a tremendous leading company in the marine services industry, led by Ian Douglas and his GMG team, and we know they will continue to build on their success while under the JFLCO umbrella.”
“Importantly, the sale of Global Marine will enable HC2 to take a significant initial step in our plan to de-lever,” added Mr. Falcone. “Once the GMG and HMN sales are completed, we will be able to redeem a significant portion of the 11.5% Notes at the HC2 corporate level. We believe this will better position our capital structure as we continue to be opportunistic and look to monetize additional assets at appropriate valuations, with the explicit goal of further reducing debt.”
“We remain excited about the potential for producing ongoing strong cash flows, while focusing on our expense management, and ultimately realizing longer-term growth opportunities across our overall platform of businesses,” concluded Mr. Falcone.
Deutsche Bank Securities and ABN AMRO acted as M&A advisors to Global Marine in connection with the transaction.
“We’re about to embark on a new chapter for Global Marine Group, and I want to thank the HC2 team for being effective owners of our business. The purchase by JFLCO provides the certainty that we need to continue to build our business across the telecommunications and utilities markets, deepening and widening the service we provide to our customers. We are fortunate to operate in markets that are transforming the world and we support the rising demand for connectivity of global communications and offshore renewable energy sources,” said Ian Douglas, CEO of Global Marine Group.
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