NEW YORK - INNOVATE Corp. (NYSE: VATE), a diversified holding company, has initiated a $19.0 million rights offering for its common stock, as stated in a press release today. This move allows existing INNOVATE shareholders to purchase new shares proportionate to their current holdings. Those who fully exercise their basic subscription rights are also granted over-subscription privileges, which enables them to potentially acquire additional unsubscribed shares.
The rights offering is structured so that for each share held as of 5:00 p.m. on March 6, 2024, stockholders receive one transferable subscription right to buy 0.2858 shares of common stock at $0.70 per share. Preferred stockholders and convertible note holders with dividend participation rights are also eligible to join in the offering.
Lancer Capital LLC, led by Avram A. Glazer, the Chairman of INNOVATE and its largest shareholder, is backing the offering. However, Lancer Capital is restricted from exercising or transferring its subscription rights. Instead, it has committed to purchasing up to $19.0 million of newly issued Series C Non-Voting Participating Convertible Preferred Stock at $1,000 per share. An additional $16.0 million of Preferred Stock will be acquired by Lancer Capital in a concurrent private placement, subject to the rights offering's completion.
The Preferred Stock, junior to existing preferred stock in liquidation preference and on par with common stock, is convertible into common stock at the same price as the rights offering, pending shareholder approval. If not converted, the Preferred Stock can be redeemed by the company at a set price, plus an annual interest of 8% due upon redemption.
The common stock issued will be listed on the New York Stock Exchange under the symbol VATE.
This article is based on a press release statement from INNOVATE Corp.
InvestingPro Insights
As INNOVATE Corp. (NYSE: VATE) embarks on its rights offering to raise capital, potential and existing investors may be closely monitoring the company's financial health and stock performance. According to the latest data available on InvestingPro, INNOVATE Corp. has a market capitalization of approximately $70.52 million. This reflects the current valuation of the company in the market and is a fundamental metric for investors to consider when evaluating the size and scale of INNOVATE relative to its peers.
InvestingPro Tips suggest that INNOVATE's stock has experienced significant return over the last week, with a 12.66% price total return, indicating a recent uptick in investor confidence. However, the stock has also been characterized by high price volatility, which is an important consideration for investors who may be weighing the risks associated with such fluctuations. Notably, the stock price has seen a considerable decline over the past year, with a 73.98% drop in price total return.
Financially, the company has not been profitable over the last twelve months, as evidenced by a negative P/E ratio of -1.9. This could be a factor for investors to assess the company's ability to generate earnings. Additionally, the revenue has contracted by 13.09% over the last twelve months, which might be a concern for those looking at the company's growth prospects.
For investors interested in a deeper analysis, there are more InvestingPro Tips available, which could provide further insight into INNOVATE's financial performance and stock behavior. Readers can access these additional tips by visiting https://www.investing.com/pro/VATE and can take advantage of a special offer by using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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