COWEN GROUP, INC. (NASDAQ:COWN) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01. Entry into a Material Definitive Agreement.
On March 29, 2017, Cowen Group, Inc. (the Company) entered into a
Stock Purchase Agreement (the Stock Purchase Agreement) with
Shanghai Huaxin Group (HongKong) Limited (the Investor), a Hong
Kong company and an affiliate of China Energy Company Limited, to
which the Company agreed to issue and sell to the Investor a
number of shares of the Companys Class A Common Stock
representing 19.9% of the outstanding shares of Class A Common
Stock as of three business days prior to the closing of the
transaction (the Shares) for an estimated aggregate purchase
price of approximately $100 million (the Equity Investment). to
the Stock Purchase Agreement, the Investor will purchase the
Shares for $18.00 per share, representing a 29.5% premium to the
Companys closing share price on March 28, 2017. The Stock
Purchase Agreement contains customary representations, warranties
and covenants of the Company and the Investor. The closing of the
Equity Investment is subject to receipt of certain regulatory and
government approvals, including approval from the Committee on
Foreign Investment in the United States and compliance with the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
the funding of the Loan described below and the satisfaction of
other customary closing conditions.
Stock Purchase Agreement (the Stock Purchase Agreement) with
Shanghai Huaxin Group (HongKong) Limited (the Investor), a Hong
Kong company and an affiliate of China Energy Company Limited, to
which the Company agreed to issue and sell to the Investor a
number of shares of the Companys Class A Common Stock
representing 19.9% of the outstanding shares of Class A Common
Stock as of three business days prior to the closing of the
transaction (the Shares) for an estimated aggregate purchase
price of approximately $100 million (the Equity Investment). to
the Stock Purchase Agreement, the Investor will purchase the
Shares for $18.00 per share, representing a 29.5% premium to the
Companys closing share price on March 28, 2017. The Stock
Purchase Agreement contains customary representations, warranties
and covenants of the Company and the Investor. The closing of the
Equity Investment is subject to receipt of certain regulatory and
government approvals, including approval from the Committee on
Foreign Investment in the United States and compliance with the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
the funding of the Loan described below and the satisfaction of
other customary closing conditions.
In connection with the Equity Investment, the Company has also
entered into an Investor Rights Agreement (the Investor Rights
Agreement) with the Investor, to which the Investor will have the
right following the closing of the Equity Investment to nominate
one, two or three representatives for election to the board of
directors of the Company for so long as it beneficially owns at
least 7.5%, 10% or 12.5%, respectively, of the Companys
outstanding Class A Common Stock. Each of the Investors director
designees must be reasonably acceptable to the Company, approved
by the Companys Nominating and Governance Committee and meet the
independence standards set forth in the NASDAQ listing rules. In
addition, for a period of three years following the closing of
the Equity Investment (the Standstill Period), the Investor will
be subject to a customary standstill restriction which, among
other things, prohibits the Investor from taking certain actions
or increasing its ownership to more than 19.9% of the Companys
outstanding Class A Common Stock, without the Companys prior
written consent. During the Standstill Period, the Investor has
agreed to vote its shares in accordance with the recommendation
of the Company on any matters submitted to a vote of the
stockholders of the Company, but may abstain from voting in its
discretion. Following the Standstill Period, for so long as the
Investor has a representative on the Companys board of directors,
the Investor may not take certain actions or increase its
ownership to more than 29.9% of the Companys outstanding Class A
Common Stock, without the Companys prior written consent. In
addition, the Investor has agreed not to transfer any of the
Shares for a period of 12 months following the closing of the
Equity Investment, subject to certain exceptions. The standstill
and lock-up restrictions also terminate at such time as the
Investor holds 7.5% or less of the Companys outstanding shares of
Class A Common Stock. The Investor will also have certain
registration rights, preemptive rights and anti-dilution
protection under the Investor Rights Agreement.
entered into an Investor Rights Agreement (the Investor Rights
Agreement) with the Investor, to which the Investor will have the
right following the closing of the Equity Investment to nominate
one, two or three representatives for election to the board of
directors of the Company for so long as it beneficially owns at
least 7.5%, 10% or 12.5%, respectively, of the Companys
outstanding Class A Common Stock. Each of the Investors director
designees must be reasonably acceptable to the Company, approved
by the Companys Nominating and Governance Committee and meet the
independence standards set forth in the NASDAQ listing rules. In
addition, for a period of three years following the closing of
the Equity Investment (the Standstill Period), the Investor will
be subject to a customary standstill restriction which, among
other things, prohibits the Investor from taking certain actions
or increasing its ownership to more than 19.9% of the Companys
outstanding Class A Common Stock, without the Companys prior
written consent. During the Standstill Period, the Investor has
agreed to vote its shares in accordance with the recommendation
of the Company on any matters submitted to a vote of the
stockholders of the Company, but may abstain from voting in its
discretion. Following the Standstill Period, for so long as the
Investor has a representative on the Companys board of directors,
the Investor may not take certain actions or increase its
ownership to more than 29.9% of the Companys outstanding Class A
Common Stock, without the Companys prior written consent. In
addition, the Investor has agreed not to transfer any of the
Shares for a period of 12 months following the closing of the
Equity Investment, subject to certain exceptions. The standstill
and lock-up restrictions also terminate at such time as the
Investor holds 7.5% or less of the Companys outstanding shares of
Class A Common Stock. The Investor will also have certain
registration rights, preemptive rights and anti-dilution
protection under the Investor Rights Agreement.
In connection with and to the Stock Purchase Agreement, the
Investor has agreed to make a senior unsecured loan (the Loan) to
the Company (and/or one or more of its subsidiaries) in an amount
equal to $175 million to the terms of a term loan agreement to be
entered into
Investor has agreed to make a senior unsecured loan (the Loan) to
the Company (and/or one or more of its subsidiaries) in an amount
equal to $175 million to the terms of a term loan agreement to be
entered into
upon closing of the Equity Investment (the Term Loan
Agreement). The Loan is for a term of six (6) years and
interest on the Loan will accrue at a rate of 7.5% per annum.
The Companys obligations under the Term Loan Agreement will be
guaranteed jointly and severally by certain of the Companys
subsidiaries.
Agreement). The Loan is for a term of six (6) years and
interest on the Loan will accrue at a rate of 7.5% per annum.
The Companys obligations under the Term Loan Agreement will be
guaranteed jointly and severally by certain of the Companys
subsidiaries.
Proceeds of the Equity Investment would be used to repay the
Companys 8.25% Senior Notes due 2021 and fund growth
opportunities at the Company and its subsidiaries. Proceeds of
the Loan would be used for general corporate purposes,
including strategic transactions, acquisitions and making
investments in the Companys business.
Companys 8.25% Senior Notes due 2021 and fund growth
opportunities at the Company and its subsidiaries. Proceeds of
the Loan would be used for general corporate purposes,
including strategic transactions, acquisitions and making
investments in the Companys business.
The Equity Investment and the Loan are expected to close
concurrently by the end of the third quarter of 2017, subject
to satisfaction of the closing conditions set forth in the
Stock Purchase Agreement, and, in the case of the Loan, in the
Term Loan Agreement.
concurrently by the end of the third quarter of 2017, subject
to satisfaction of the closing conditions set forth in the
Stock Purchase Agreement, and, in the case of the Loan, in the
Term Loan Agreement.
Copies of each of (i) the Stock Purchase Agreement, (ii) the
Investor Rights Agreement and (iii) the Form of Term Loan
Agreement are attached to this Report as Exhibit 10.1, Exhibit
10.2>and Exhibit 10.3, respectively, the terms of which are
incorporated herein by reference. The foregoing descriptions of
the Stock Purchase Agreement, Investor Rights Agreement and
Form of Term Loan Agreement are qualified in their entirety by
reference to the full text of such agreements.
Investor Rights Agreement and (iii) the Form of Term Loan
Agreement are attached to this Report as Exhibit 10.1, Exhibit
10.2>and Exhibit 10.3, respectively, the terms of which are
incorporated herein by reference. The foregoing descriptions of
the Stock Purchase Agreement, Investor Rights Agreement and
Form of Term Loan Agreement are qualified in their entirety by
reference to the full text of such agreements.
The Stock Purchase and Term Loan Agreement each contain
representations and warranties made by and to the parties
thereto as of specific dates. The statements embodied in those
representations and warranties were made for purposes of each
respective contract between the parties and are subject to
qualifications and limitations agreed by the parties in
connection with negotiating the terms of each respective
contract. In addition, certain representations and warranties
were made as of a specified date, may be subject to a
contractual standard of materiality different from those
generally applicable to investors, or may have been used for
the purpose of allocating risk between the parties rather than
establishing matters as facts.
representations and warranties made by and to the parties
thereto as of specific dates. The statements embodied in those
representations and warranties were made for purposes of each
respective contract between the parties and are subject to
qualifications and limitations agreed by the parties in
connection with negotiating the terms of each respective
contract. In addition, certain representations and warranties
were made as of a specified date, may be subject to a
contractual standard of materiality different from those
generally applicable to investors, or may have been used for
the purpose of allocating risk between the parties rather than
establishing matters as facts.
Item 3.02 Unregistered Sales of Equity Securities.
The information provided under Item 1.01 above pertaining to
the purchase and sale of the Shares to the Stock Purchase
Agreement is incorporated by reference to this Item 3.02 in its
entirety.
the purchase and sale of the Shares to the Stock Purchase
Agreement is incorporated by reference to this Item 3.02 in its
entirety.
Item 8.01. Other Events
On March 29, 2017, the Company issued a press release
announcing the transactions described in Item 1.01. A copy of
the press release is attached hereto as Exhibit 99.1 and is
incorporated by reference herein.
announcing the transactions described in Item 1.01. A copy of
the press release is attached hereto as Exhibit 99.1 and is
incorporated by reference herein.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
|
10.1
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Stock Purchase Agreement, dated as of March 29, 2017,
by and between Cowen Group, Inc. and Shanghai Huaxin Group (HongKong) Limited, a Hong Kong company. |
|
10.2
|
Investor Rights Agreement, dated as of March 29, 2017,
by and between Cowen Group, Inc. and Shanghai Huaxin Group (HongKong) Limited, a Hong Kong company. |
|
10.3
|
Form of Term Loan Agreement
|
99.1 Press Release issued by Cowen Group, Inc. on March 29,
2017.
2017.
About COWEN GROUP, INC. (NASDAQ:COWN)
Cowen Group, Inc. is a financial services company. The Company provides alternative investment management, investment banking, research, sales and trading, and prime brokerage services. It operates through two segments: alternative investment and broker-dealer. The alternative investment segment includes hedge funds, private equity structures, registered investment companies and listed investment vehicles. The broker-dealer segment offers industry focused investment banking for growth-oriented companies, including advisory and global capital markets origination and domain knowledge-driven research and a sales and trading platform for institutional investors under the Cowen name. Its broker-dealer businesses include research, sales and trading and investment banking services to companies and institutional investor clients in its target sectors, which include healthcare, technology, information and technology services, consumer, real estate investment trusts, energy and transportation. COWEN GROUP, INC. (NASDAQ:COWN) Recent Trading Information
COWEN GROUP, INC. (NASDAQ:COWN) closed its last trading session down -0.05 at 15.10 with 1,719,556 shares trading hands.
