INNOVATE Launches Indebtedness Refinancing Transactions
$48.7 million privately negotiated convertible notes exchanges.$330 million exchange offer of senior secured notes and solicitation of consentsAgreement in principle to extend revolving credit agreementAgreement in principle to amend and extend the CGIC noteAgreement in principle to extend Spectrum notesAgreement in principle to amend and extend the R2 Technologies note
NEW YORK, July 17, 2025 (GLOBE NEWSWIRE) -- INNOVATE Corp. (NYSE:VATE) ("INNOVATE" or the "Company") today announced that it intends to enter into a series of indebtedness refinancing transactions that will extend the Company's debt maturities. The refinancing transactions include (i) privately negotiated exchanges of certain of the Company's convertible senior notes, (ii) an exchange offer and consent solicitation with respect to the Company's senior secured notes, (iii) agreements in principle to extend the Company's 2020 revolving credit agreement, (iv) an agreement in principle to amend and extend the Continental General Insurance Company ("CGIC") note, (v) an agreement in principle to extend the Spectrum Notes (as defined below), and (vi) an agreement in principle to amend and extend the R2 Technologies note.
Convertible Notes Exchanges
The Company has today entered into privately negotiated exchange agreements with certain holders of its 7.5% Convertible Senior Notes due 2026 (the "Existing Convertible Notes") (collectively, the "Exchange Agreements") pursuant to which the Company plans to exchange approximately $48.7 million of the outstanding aggregate principal amount of the Existing Convertible Notes for approximately $51.1 million aggregate principal amount of newly issued 9.5% Convertible Senior Notes due 2027 (the "New Convertible Notes") (the transactions collectively, the "Convertible Notes Exchanges") with substantially the same terms, except that the New Convertible Notes will (i) have a maturity date of March 1, 2027, (ii) be secured by a second-priority lien on certain existing collateral and other collateral not previously pledged, (iii) have an interest rate of 9.5%, with the first payment delivered in the form of additional exchange consideration and the second payment being made in kind, (iv) include updated covenants (including, without limitation, restrictive covenants substantially consistent with the New Senior Secured Notes (as defined below)), (v) be guaranteed by the same guarantors as the New Senior Secured Notes (defined below), (vi) be redeemable by the Company in whole or in part, at any time and from time to time, at a redemption price equal to 100% of the principal amount of the notes being redeemed plus accrued and unpaid interest thereon to the redemption date and (vii) include an updated "Fundamental Change" definition that will exclude ownership of the Company's equity by Lancer Capital LLC and its affiliates. The Exchange Agreements will also contain consents from certain holders of the Existing Convertible Notes to effect certain proposed amendments to the terms of such Existing Convertible Notes to eliminate substantially all of the restrictive covenants, certain events of default and related provisions. The Convertible Notes Exchanges are conditioned upon, and are expected to close concurrently with, the early settlement of the Exchange Offer (as defined below).
Exchange Offer
The Company has today launched an exchange offer and consent solicitation to eligible holders of its 8.5% Senior Secured Notes due 2026 (the "Existing Senior Secured Notes" and, together with the Existing Convertible Notes, the "Existing Notes") to exchange such Existing Senior Secured Notes for newly issued 10.5% Senior Secured Notes due 2027 (the "New Senior Secured Notes" and, together with the New Convertible Notes, the "New Notes") with substantially the same terms, except that the New Senior Secured Notes will (i) have a maturity date of February 1, 2027, (ii) have an interest rate of 10.5%, with the first payment delivered in the form of additional exchange consideration and the second payment being made in kind, and (iii) include updated covenants (the "Exchange Offer"). Additionally, the New Senior Secured Notes indenture requires us to meet certain milestones with respect to strategic alternatives for our operating subsidiaries, including asset sales generating at least $150 million in net proceeds. Under the Existing Senior Secured Notes indenture, DBM Global Inc. is not a subsidiary guarantor, and the Company's equity interests in DBM Global Inc. are pledged as collateral. This will remain the same under the New Senior Secured Notes Indenture. As of the date hereof, DBM Global Inc. is in good standing with its lenders and sureties.
Simultaneously, the Company is conducting the solicitation of consents from eligible holders of the Existing Senior Secured Notes to effect certain proposed amendments to the terms of such Existing Senior Secured Notes to eliminate substantially all of the restrictive covenants, events of default and related provisions in a customary exit consent solicitation and to subordinate the liens on the collateral securing the Existing Senior Secured Notes, meaning that any Existing Senior Secured Notes that remain outstanding after the consummation of the Exchange Offer will be subordinated obligations of the Company and the guarantors thereof (the "Proposed Amendments").
The Company has entered into a Commitment Letter (the "Commitment Letter") dated July 17, 2025, between the Company and certain holders of Existing Senior Secured Notes (the "Supporting Noteholders"). Subject to the terms and conditions set forth in the Commitment Letter, the Supporting Noteholders have agreed to tender their Existing Senior Secured Notes in the Exchange Offer and deliver consents to the Proposed Amendments prior to the early participation deadline. The Supporting Noteholders represent approximately 75.3% of the aggregate principal amount of the Existing Senior Secured Notes outstanding as of the date of this press release. The consent of the Supporting Noteholders suffices to approve the Proposed Amendments in respect of the Existing Senior Secured ...
