Harbinger Group Inc. ("HGI" or the "Company")(NYSE:HRG), a diversified
holding company, today announced that Leucadia National Corporation
("Leucadia")(NYSE:LUK) has increased its beneficial ownership of HGI
common stock from approximately 9% to approximately 20%.
Leucadia agreed to purchase an aggregate of 23,000,000 preferred
securities of subsidiaries of funds managed by Harbinger Capital
Partners (the "HCP Funds"), at a price of $11 per share. Following the
receipt of insurance regulatory approval, the preferred securities are
exchangeable for an aggregate of 23,000,000 shares of HGI's common stock
owned by the HCP Funds (the "Purchased Shares"). HGI is not selling any
securities in this transaction.
"HGI has a long-standing relationship with Leucadia, one of the world's
leading long-term investors, and I am pleased that it has increased its
stake in Harbinger Group," said Phil Falcone, HGI's Chief Executive
Officer. "Leucadia's commitment to pursuing compelling value
opportunities is a great fit with HGI's core principles and investment
Omar Asali, HGI's President, said: "HGI and Leucadia share a similar
focus, and we are pleased to strengthen our relationship with them as we
continue to execute on our strategy of creating long-term value through
prudent and patient capital allocation."
Under the terms of the transaction, while awaiting insurance regulatory
approval, the HCP Funds have the right to vote the Purchased Shares and
Leucadia has the right from time to time to sell all or a portion of the
Purchased Shares and receive the proceeds from such sale for its own
In connection with their purchase, Leucadia has entered into a letter
agreement with the Company pursuant to which, from and after the closing
of the sale of the Purchased Shares, Leucadia will be entitled to
appoint two representatives to the Company's board of directors. The
initial Leucadia representatives are expected to be Joseph S. Steinberg
(Chirman of Leucadia) and Andrew Whittaker (Vice Chairman of Leucadia).
The Company also granted a waiver to Leucadia of the restrictions on
"business combinations" set forth in the Company's certificate of
incorporation and Leucadia has agreed to abide by customary standstill
provisions for a period of two years.
The complete agreement between the Company and Leucadia will be included
as an exhibit to a Current Report on Form 8-K, which will be filed with
the Securities and Exchange Commission.
About Harbinger Group Inc.
Harbinger Group Inc. ("HGI") is a diversified holding company. HGI's
principal operations are conducted through companies that: offer life
insurance and annuity products; offer branded consumer products (such as
consumer batteries, residential locksets, residential builders'
hardware, faucets, shaving and grooming products, personal care
products, small household appliances, specialty pet supplies, lawn,
garden and home pest control products, personal insect repellents);
provide asset-backed loans; and own energy assets. HGI is principally
focused on acquiring controlling and other equity stakes in businesses
across a diversified range of industries and growing its existing
businesses. In addition to HGI's intention to acquire controlling equity
interests, HGI may also make investments in debt instruments and acquire
minority equity interests in companies. HGI is headquartered in New York
and traded on the New York Stock Exchange under the symbol HRG.
Forward Looking Statements
"Safe Harbor" Statement Under the Private Securities Litigation Reform
Act of 1995: This release contains, and certain oral statements made by
our representatives from time to time may contain, forward-looking
statements, including those statements regarding the transaction. These
statements are based on the beliefs and assumptions of HGI's management
and the management of HGI's subsidiaries (including target businesses).
Generally, forward-looking statements include information concerning the
transaction, other actions, events, results, strategies and expectations
and are generally identifiable by use of the words "believes,"
"expects," "intends," "anticipates," "plans," "seeks," "estimates,"
"projects," "may," "will," "could," "might," or "continues" or similar
expressions. Factors that could cause actual results, events and
developments to differ include, without limitation, delay in obtaining
insurance regulatory approval for the transaction, capital market
conditions, the ability of HGI's subsidiaries (including, target
businesses following their acquisition) to generate sufficient net
income and cash flows to make upstream cash distributions, HGI and its
subsidiaries ability to identify any suitable future acquisition
opportunities, efficiencies/cost avoidance, cost savings, income and
margins, growth, economies of scale, combined operations, future
economic performance, conditions to, and the timetable for, completing
the integration of financial reporting of acquired or target businesses
with HGI or HGI subsidiaries, completing future acquisitions and
dispositions, litigation, potential and contingent liabilities,
management's plans, changes in regulations, taxes and the risks that may
affect the performance of the operating subsidiaries of HGI and those
factors listed under the caption "Risk Factors" in HGI's most recent
Annual Report on Form 10-K and Quarterly Report on Form 10-Q, filed with
the Securities and Exchange Commission. All forward-looking statements
described herein are qualified by these cautionary statements and there
can be no assurance that the actual results, events or developments
referenced herein will occur or be realized. HGI does not undertake any
obligation to update or revise forward-looking statements to reflect
changed assumptions, the occurrence of unanticipated events or changes
to future operation results.
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