Item 7.01. Regulation FD Disclosure
As previously disclosed, on October 27, 2022, INNOVATE Corp. received a written notice from the New York Stock Exchange (the “NYSE”) that it was not in compliance with the continued listing standard set forth in Section 802.01C of the NYSE’s Listed Company Manual (“Section 802.01C”), as the average closing price of the Company’s common stock (the “Common Stock”) was less than $1.00 per share over a consecutive 30 trading-day period. On January 3, 2022, the Company received a written notice from the NYSE that for the 30 trading days ending December 30, 2022, the average closing price of the Common Stock was above the $1.00 minimum requirement, and the Company is in compliance with Section 802.01C.
The information in Item 7.01 of this Current Report on Form 8-K is being furnished and shall not be deemed “filed” for purposes of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall it be deemed incorporated by reference into any of the Company’s filings under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof and regardless of any general incorporation language in such filings, except to the extent expressly set forth by specific reference in such a filing.
Item 8.01. Other Events.
Seventh Omnibus Amendment and Warrant Amendments
On December 30, 2022, HC2 Broadcasting Holdings Inc. (“HC2 Broadcasting”) entered into a Seventh Omnibus Amendment to Secured Notes (the “Note Amendment”) with HC2 Station Group, Inc., HC2 Broadcasting Inc., HC2 Network Inc., HC2 Broadcasting License Inc., DTV America Corporation, HC2 Broadcasting Intermediate Holdings Inc., HC2 Broadcasting Holdings Inc., MSD PCOF Partners XVIII, LLC, MassMutual Ascend Life Insurance Company (“MassMutual”), and Great American Insurance Company (“GAIC”), which, among other things, extended $52.2 million of its Senior Secured Notes, due December 30, 2022 to May 31, 2024. The $52.2 million of Senior Secured notes consisted of $19.3 million of 8.5% Senior Secured notes and $32.9 million of 10.5% Senior Secured Notes.
The terms on the $19.3 million 8.5% Senior Notes remained the same. At the time of the extension, HC2 Broadcasting had accrued interest and other fees $6.9 million.
The interest rate on the $32.9 million 10.5% Senior Notes were increased to 11.45% and accrued interest and fees of $17.5 million were capitalized into the principal balance. All other terms were essentially the same.
Total outstanding principal after the refinancing was $69.7 million and $6.9 million of accrued interest and fees remain accrued.
The foregoing description of terms of the Note Amendment is a summary of certain of their respective terms only and is qualified in its entirety by the full text of the Note Amendment, filed as Exhibit 10.2 to this Current Report on Form 8-K and incorporated herein by reference.
Concurrently therewith and as part of the consideration for extending the 10.5% Senior Notes, HC2 Broadcasting amended warrants to purchase 145,825 shares of common stock of HC2 Broadcasting Holdings common stock held by the lenders of the 10.5% Senior Notes by extending the time to exercise such to the second half of 2026 and reducing the exercise price per share (i) from $140 to $.01 in the case of the certain of the warrants and (ii) from $130 to $.01 in the case of the remaining warrants.
Mutual Release and Termination Agreement with Azteca International Corporation and TV Azteca S.A.B. de C.V.
On December 31, 2022, HC2 Network, Inc. entered into that certain Mutual Release and Termination Agreement (the “MTA”) with Azteca International Corporation and TV Azteca, S.A.B. de C.V. (collectively, “TVA”), pursuant to which the parties agreed to terminate that certain Program Licensing Agreement entered into as of November 29, 2017 (the “PLA”), and the Binding Term Sheet: La Academia (the “Term Sheet”), dated as of November 10, 2019, and exchange mutual releases of any and all claims based on, arising out of or related to the PLA and certain other agreements to which HC2 Networks and TVA were previously parties.
The foregoing description of terms of the MTA is a summary of certain of its terms only and is qualified in its entirety by the full text of the MTA, filed as Exhibit 10.3 to this Current Report on Form 8-K and incorporated herein by reference.