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Harbinger Group Inc. Announces Conversion Of Its Preferred Stock

Stocks in this article: HRG

Harbinger Group Inc. (NYSE:HRG) (“ HGI” or the “ Company”) announced today that it is exercising its option to convert its issued and outstanding shares of Series A Participating Convertible Preferred Stock (“ Series A Preferred Shares”) and Series A-2 Participating Convertible Preferred Stock (“ Series A-2 Preferred Shares” and, together with the Series A Preferred Shares, the “ Preferred Shares”) into common stock of the Company, par value $0.01 (“ Common Stock”). The conversion will be effective May 15, 2014 (the “ Conversion Date”). The Company is acting pursuant to Section 5(b) of the respective certificate of designation governing the Preferred Shares.

On the Conversion Date, holders of the Series A Preferred Shares will receive approximately 160.95 shares of common stock per Series A Preferred Share converted and holders of Series A-2 Preferred Share will receive approximately 148.11 shares of common stock per Series A-2 Preferred Share converted. The holders will also receive cash in lieu of fractional shares and for any and all accrued but unpaid dividends.

Following the Conversion Date, all rights of the Preferred Shareholders, including rights to dividends, will terminate except that, in accordance with and for so long as required by the certificate of designation governing the Series A Preferred Shares, a certain number of Preferred Shares held by CF Turul LLC (“ CF Turul”), an affiliate of Fortress Investment Group LLC, will not be converted in order to give effect to the limitation on voting applicable to CF Turul prior to its receipt of applicable insurance regulatory approval, and a Preferred Share held by CF Turul will not be converted in order to preserve CF Turul’s continuing rights under the certificate of designation governing the Series A Preferred Shares. The Preferred Shares held by CF Turul following the Conversion Date will not be entitled to receive dividends and distributions.

The Company expects that the conversion will reduce its cash interest and related obligations and create additional liquidity in the trading of the Company's common stock.

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