INNOVATE Corp. announces preliminary results of rights offering

INNOVATE announced the preliminary results of its successful rights offering, which expired at 5:00 p.m., New York City time, on April 19, 2024. According to Computershare Trust Company, N.A., as of the expiration date, 18.1 million basic subscription rights were exercised to purchase an aggregate of 5.2 million shares of common stock and 0.1 million additional shares of common stock were subscribed for under the over-subscription privilege, subject to proration. Further, in accordance with the Investment Agreement entered into by the Company with Lancer Capital, an investment fund led by Avram Glazer, the Chairman of the Board of Directors of the Company and the Company’s largest stockholder, Lancer Capital agreed to partially backstop the rights offering in an amount not to exceed $19.0 million by purchasing newly issued Series C Non-Voting Convertible Participating Preferred Stock, par value $0.001 per share. Based on the preliminary results, we expect that 15.3 thousand shares of preferred stock at a price of $1,000 per share will be purchased under the backstop commitment. This includes 6.3 thousand shares of preferred stock to be purchased at the upcoming closing and 9.0 thousand shares already purchased as part of an equity advance arrangement under the Investment Agreement. On March 28, 2024, the Company issued and sold 25.0 thousand shares of the preferred stock to Lancer Capital for an aggregate purchase price of $25.0 million under the equity advance. The remaining 16.0 thousand shares of preferred stock purchased under the equity advance are part of the previously announced concurrent private placement. The preferred stock can be convertible into common stock at the price equivalent to the subscription price under the rights offering contingent on shareholder approval, which will be voted on at the next annual meeting. The shares of common stock to be issued at the closing of the rights offering will be purchased at the subscription price of $0.70 per whole share. The Company expects the subscription agent to distribute the shares of common stock and the proceeds from the rights offering on or about April 24, 2024, subject to customary closing conditions. The results of the rights offering are preliminary and subject to change pending finalization of subscription procedures by the subscription agent. The Company expects to issue a press release on April 24, 2024, to announce the final results of the rights offering. The Company will receive aggregate gross proceeds of approximately $35.0 million from the rights offering and concurrent private placement, and expects to use the proceeds for general corporate purposes, including debt service and for working capital.