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Item 1.01. Entry Into a Material Definitive Agreement
On October 11, 2018, HC2 Holdings, Inc. (“HC2”) announced that its subsidiary, DBM Global, Inc. (“Buyer”), entered into an Agreement and Plan
of Merger, dated October 10, 2018 (the “Agreement”), with DBM Merger Sub, Inc. (“Merger Sub”), a wholly owned subsidiary of Buyer, CB-Horn Holdings, Inc. (the “Company”), and Charlesbank Equity Fund VI, Limited Partnership, solely in its capacity as representative for the Company’s securityholders, pursuant to which Merger Sub will merge with, and into, the Company with the Company surviving the merger as an indirect subsidiary of Buyer (the “Merger”).
Pursuant to the terms of the Agreement, Buyer will acquire the
Company for an enterprise value of $135 million, including the assumption of existing indebtedness, subject to customary adjustments for cash, debt, transaction expenses and normalized working capital. Pursuant to the Agreement, Buyer has agreed to customary covenants to obtain debt financing, and the Company has agreed to provide reasonable cooperation with Buyer in Buyer’s efforts to obtain such financing. There is no financing condition to the consummation of the Merger.
The Agreement contains customary representations, warranties and closing conditions.
Either Buyer or the Company may terminate the Agreement (i) if any non-appealable final action has been issued by a governmental entity permanently
restraining, enjoining or otherwise prohibiting the consummation of the Merger or (ii) the Merger is not consummated by November 30, 2018. Buyer may terminate the Agreement if the Company is in breach under the Agreement such that certain conditions to the closing are incapable of being satisfied and such breach is not cured in the time period specified in the Agreement. The Company may terminate the Agreement (i) if Buyer or Merger Sub is in is in breach under the Agreement such that certain conditions to the closing are incapable of being satisfied and such breach is not cured in the time period specified in the Agreement or (ii) if all conditions to Buyer’s obligations to closing have been satisfied or waived, the
Company has sent written notice to Buyer confirming that the Company stands ready, willing and able to consummate the Closing and Buyer fails to consummate the transactions contemplated by the Agreement, and, in each case, Buyer will be required to pay to the Company a reverse termination fee of $5,750,000 (the “Termination Fee”). The Agreement may also be terminated by mutual written consent of Buyer and the Company.
Immediately prior the closing of the Merger, the Company will spin-off certain assets related to a previous customer engagement by the
Company that has since terminated to certain of the Company’s existing shareholders, which assets will not be acquired by Buyer.
HC2 will guaranty the performance of Buyer’s obligation to pay the Termination Fee under the Agreement in the event that such fee becomes payable.
The transaction is expected to close in the fourth quarter of 2018.
The foregoing description of the terms of the Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Agreement, which HC2 anticipates will be filed with the Company’s Current Report on Form 8-K reporting the closing of the Merger. The Agreement contains representations
and warranties by each of the parties to the Agreement, which were made only for purposes of that Agreement and as of specified dates. The representations, warranties and covenants in the Agreement were made solely for the benefit of the parties to the Agreement, are subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Agreement instead of establishing these matters as facts, and are subject to standards of materiality applicable to the contracting parties that may differ from those applicable to investors. Investors should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of HC2, Buyer, Merger Sub, the Company or any of their respective subsidiaries
or affiliates. Moreover, information concerning the subject matter of the representations, warranties and covenants may change after the date of the Agreement, which subsequent information may or may not be fully reflected in HC2’s public disclosures.
The information contained in Item 7.01 of this Current Report on Form 8-K, including Exhibit
99.1, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended nor shall it be
deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
This Current Report on Form 8-K (the “Current Report”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. The forward-looking
statements involve risks and uncertainties. Actual results may differ materially from expectations discussed in such forward-looking statements. Although HC2 believes that its forward-looking statements are based on reasonable assumptions, expected results may not be achieved, and actual results may differ materially from its expectations. HC2’s forward-looking statements should not be relied upon except as statements of HC2’s present intentions and of HC2’s present expectations, which may or may not occur. Cautionary statements should be read as being applicable to all forward-looking statements wherever they appear. Except as required by law, HC2 undertakes no obligation to release publicly the result of any revision to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence unanticipated events. Readers are also urged to carefully review and consider the various disclosures HC2 has made
in this Current Report, as well as HC2’s other filings with the Securities and Exchange Commission (the “SEC”). In particular, see HC2’s Annual Report on Form 10-K, filed with the SEC on March 14, 2018 (and amendment thereto filed with the SEC on April 2, 2018), and Quarterly Report on Form 10-Q, filed with the SEC on August 8, 2018, copies of which are available upon request from HC2. HC2 does not assume any obligation to update the forward-looking information contained in this Current Report.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
