NEW YORK - INNOVATE Corp. (NYSE:VATE), a diversified holding company, has announced a rights offering aiming to raise $19 million through the issuance of common stock. The company's Board of Directors has set a record date for this offering, providing all existing stockholders the option to purchase additional shares proportionate to their current holdings.
The rights offering allows stockholders the opportunity to subscribe for their basic subscription amount and grants over-subscription privileges to those who exercise their rights in full. These privileges enable stockholders to subscribe for any remaining unsubscribed shares. Should over-subscriptions exceed the available shares, they will be allocated on a pro-rata basis.
Stockholders as of March 6, 2024, will receive one transferable subscription right for each share held, with the subscription price to be determined before the offering's start. This includes holders of the company's preferred stock and convertible notes who are entitled to dividend distributions. The offering is set to expire at 5:00 PM Eastern Time on March 25, 2024, unless extended, with subscription rights certificates and prospectus supplements being mailed starting March 8, 2024.
Furthermore, Lancer Capital LLC, led by Avram A. Glazer, INNOVATE's Chairman and principal stockholder, has committed to a backstop arrangement, agreeing to purchase up to $19 million in newly issued Series C Non-Voting Participating Convertible Preferred Stock at $1,000 per share. Lancer Capital is also set to buy an additional $16 million of Preferred Stock in a private placement concurrent with the rights offering's settlement.
If the rights offering does not settle by March 29, 2024, Lancer Capital will purchase $25 million of Preferred Stock, with the company redeeming any excess from Lancer Capital at the issue price if the actual common stock sold is less than $25 million. The Preferred Stock may be converted into common stock at the rights offering subscription price, pending shareholder approval, or redeemed by the company with an 8% interest accrued only upon redemption.
INNOVATE intends to use the proceeds from the rights offering for general corporate purposes. The offering is pursuant to the company's effective shelf registration statement filed with the SEC on September 29, 2023, and declared effective on October 6, 2023.
The information provided is based on a press release statement from INNOVATE Corp.
InvestingPro Insights
As INNOVATE Corp. (NYSE:VATE) embarks on its rights offering to bolster its financial position, investors are closely monitoring the company's performance metrics. Recent data from InvestingPro shows a challenging landscape for the company, with a market capitalization of $64.97 million reflecting investor skepticism in what appears to be a period of contraction. The company's gross profit margin stands at 14.8% for the last twelve months as of Q3 2023, which is indicative of the struggles it faces in maintaining profitability.
InvestingPro Tips suggest that VATE's stock has experienced significant price volatility, with a notable downturn in recent times. The stock has taken a considerable hit, with a one-month price total return of -21.58% and a six-month price total return of -48.57%. This suggests that investor confidence has been wavering, which could influence the uptake of the rights offering. Moreover, the company has not been profitable over the last twelve months, which may raise concerns among potential investors regarding its near-term financial outlook.
For investors considering participating in the rights offering or seeking to understand INNOVATE Corp.'s investment profile more deeply, additional InvestingPro Tips are available. These tips could provide valuable insights into the company's valuation, performance, and market expectations. Currently, there are 10 more InvestingPro Tips available for VATE, which can be accessed through the platform for those seeking a comprehensive analysis.
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