NEW YORK, March 29, 2021 (GLOBE NEWSWIRE) — HC2 Holdings, Inc. (NYSE: HCHC) announced today that it has entered into a definitive agreement to sell its insurance segment, comprised of Continental Insurance Group Ltd. and its wholly-owned subsidiaries, Continental General Insurance Company and Continental LTC Inc., to Continental General Holdings LLC, an entity controlled by Michael Gorzynski. Mr. Gorzynski, a director of the Company and beneficial owner of approximately 6.6% of the Company’s outstanding common stock, is the managing member of MG Capital Management, Ltd. and has also served as executive chairman of Continental since October 2020. The total transaction value of approximately $90 million consists of a combination of $65 million in cash plus securities, including certain assets of Continental.
The Company previously announced receipt of a non-binding indication of interest from the Buyer on December 10, 2020. HC2 intends to use the transaction proceeds for general corporate purposes.
“The sale of Continental will allow HC2 to focus on its three core operating segments – Infrastructure, Life Sciences and Spectrum,” said Avie Glazer, Chairman of HC2. “These are innovative businesses that reflect today’s new economy.”
“This transaction can help HC2 achieve key strategic objectives pertaining to portfolio optimization and balance sheet strength, while enabling Continental to accelerate the execution of its strategy,” added Mr. Gorzynski. “Continental is focused on developing an industry-leading servicing platform, diversifying into new lines of business and further capitalizing on market consolidation. I look forward to continuing to help build a Continental that is a valued true partner to all policyholders and stakeholders.”
“We are pleased to have reached an agreement with Mr. Gorzynski and look forward to consummating this transaction subject to receipt of required regulatory approvals,” added Wayne Barr, Jr., HC2’s President and CEO. “This represents a further opportunity to enhance our capital structure as we continue the strong momentum of change that has occurred at HC2 over the past several months.”
The transaction, which was unanimously approved by the Board of Directors of HC2, excluding Mr. Gorzynski and Kenneth Courtis (MG Capital’s other designee on the HC2 Board), who recused themselves from the deliberations, is subject to receipt of required regulatory approvals (including review and approval by the Texas Department of Insurance), receipt of other required consents and approvals and customary closing conditions. The transaction is expected to close in the third quarter of 2021.
For further information regarding the terms and conditions of the agreement, please refer to the transaction agreement filed on Form 8-K with the Securities and Exchange Commission. Duff & Phelps is acting as financial advisor to HC2 in connection with the transaction and issued a fairness opinion to the Board of Directors of HC2 in connection with this transaction. Skadden, Arps, Slate, Meagher & Flom LLP is serving as HC2’s legal advisor.
Olshan Frome Wolosky LLP is serving as legal advisor to Michael Gorzynski.
About HC2
HC2 Holdings, Inc. (NYSE: HCHC) has a class-leading portfolio of assets primarily in Infrastructure, Life Sciences and Spectrum. HC2 is headquartered in New York, New York, and through its subsidiaries employs 2,864 people.
About Continental
Based in Austin, Texas, Continental strives to assist customers with managing the financial risks and challenges that come as they age. Our family of insurance companies and strategic partners provide administrative services to approximately 125,000 Long-Term Care, Life, Annuity and Supplemental Health customers. We are dedicated to upholding the commitments we have made to provide excellent service to all our customers and serve the needs of our claimants and their families during difficult times. Learn more at www.continental-ins.com.
About MG Capital Management
Based in New York City, MG Capital is a private investment firm that specializes in complex, value-oriented investments.
