Item 1.01 Entry into a Material Definitive Agreement.
OnJanuary 30, 2020 ,HC2 Holdings, Inc. (the "Company") announced that the Company, through its indirect subsidiary New Saxon 2019 Limited, a private company limited by shares incorporated inEngland andWales ("Seller"), in which the Company indirectly holds an approximately 73% equity interest, has entered into a definitive agreement to sell 100% of the shares ofGlobal Marine Holdings, Limited , a private company limited by shares incorporated inEngland andWales ("GMHL"), and its subsidiaries and joint venture interests, includingGlobal Marine Systems Limited , a private company limited by shares incorporated inEngland andWales ("GMSL"), toTrafalgar AcquisitionCo, Ltd. , a private company limited by shares incorporated inEngland andWales ("Purchaser"), and an affiliate ofJ.F. Lehman & Company, LLC (the "Transaction"). GMSL is a leading provider of offshore engineering services to the telecommunications, renewables, and oil and gas industries. The total base consideration paid by Purchaser in the Transaction will be$250 million , subject to customary purchase price adjustments, plus a potential earn-out of up to$12.5 million at such time, if any, asJ.F. Lehman & Company, LLC and its investment affiliates achieve a specified multiple of their invested capital. The Transaction will be effected pursuant to a Share Purchase Agreement (the "SPA") by and among Seller, Purchaser and, solely for purposes of certain specified provisions thereof, GMHL. Under the SPA, Purchaser will acquire all of the issued and outstanding shares in GMHL from Seller. The purchase price is subject to customary potential downward or upward post-closing adjustments based on net working capital, cash, unpaid transaction expenses, indebtedness and certain of the Company's pre-closing paid capital expenditures. The SPA contains customary representations, warranties and covenants for a transaction of this nature. The SPA also contains customary indemnification obligations for a transaction of this nature, except that Seller's liability for breaches of representations and warranties in the SPA, other than fundamental representations and warranties, will be limited to an indemnity escrow amount described below. The representations and warranties in the SPA (i) have been qualified by disclosures made to the other party in connection with the SPA, (ii) are subject to the materiality standards contained in the SPA, which may differ from what may be viewed as material by investors, and (iii) were made only as of the date of the SPA, the date of the closing of the Transaction or such other date as is specified in the SPA. In connection with the closing of the Transaction, Purchaser will deposit (i)$1.25 million of the base price into an escrow fund for the purpose of securing certain indemnification obligations for losses payable in the first twelve months after closing and (ii)$1.91 million of the base price into an escrow fund for the purpose of securing a purchase price adjustment, if any, in favor of Purchaser. Following the Closing, Purchaser shall pay to Seller an amount equal to$2.4 million on the earlier ofDecember 31, 2020 and the date on which a cash collateralized bond in connection with the Company's bonding facility is released. At the closing of the Transaction, Purchaser will direct £24.4 million of the base price to be paid to the trustee under the Global Marine Systems Pension Plan. The SPA also contains customary covenants restricting the operation of the business of GMSL and its subsidiaries prior to the closing without the consent of Purchaser, including with respect to acquisitions and dispositions of assets, material business transactions, matters with respect to employees and other customary restrictions.
The SPA contains certain termination rights for both Seller and Purchaser,
including termination (i) by either party if the closing has not occurred on or
before
1 -------------------------------------------------------------------------------- thereunder, and (ii) by Seller if all conditions to closing have been met or waived and Purchaser does not effect the closing within two business days after the day closing is required under the SPA. Upon closing of the Transaction, Seller and its affiliates (including the Company) will be subject for a period of four years to non-competition and non-solicitation obligations.
The closing of the Transaction is expected to occur in the first quarter of 2020, subject to the satisfaction of certain customary conditions to closing.
The foregoing summary description of the SPA does not purport to be complete and is qualified in its entirety by reference to the full text of the SPA, which is filed as Exhibit 2.1 to this Current Report on Form 8-K. Item 9.01 Financial Statements and Exhibits. (d) Exhibits. Item No. Description 2.1* Share Purchase Agreement, dated January 30 ,
2020, by and among New Saxon
2019 Limited,Trafalgar AcquisitionCo, Ltd. , and Global
(solely for purposes of Section 2.04(a), Section 6.01,
Section 6.02, Section 6.03,
Section 6.07 and Article X). * Certain schedules and exhibits to this agreement have been omitted pursuant to Item 601(a)(5) of Regulation S-K and the Company agrees to furnish supplementally to theSecurities and Exchange Commission a copy of any omitted schedule and/or exhibit upon request. 2
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