On November 30, 2017, HRG Group, Inc. (“HRG”, and together with its subsidiaries, the “Company”) announced completion of the Front Street Sale (as defined below) and the closing of the FGL Merger (as defined below) and its implication for the potential 338 Tax Election (as defined below). For additional information regarding the foregoing, see heading “Additional Transaction Information” below.

On December 5, 2017, the Company paid off the $92.0 million aggregate principal amount of notes issued by HGI Energy, LLC, a wholly-owned subsidiary of HRG, which were held by FGL and Front Street (the “Energy Notes Redemption”). As used in this report, “Insurance Operations Transactions” refers to the FGL Merger, the Front Street Sale, the 338 Tax Election and the Energy Notes Redemption.

to Article 11 of Regulation S-X, HRG files this report to disclose certain pro forma financial information regarding the Insurance Operations Transactions. For further information, see Item 2.01 below.

Additional Transaction Information

OnNovember 30, 2017, Fidelity & Guaranty Life (“FGL”), a former majority owned subsidiary of HRG Group, Inc. (“HRG”, and collectively with its respective subsidiaries, the “Company”) announced the completion of FGL’s merger (the “FGL Merger”) with CF Corporation and its related entities (collectively, the “CF Entities”) to its previously disclosed Agreement and Plan of Merger (the “FGL Merger Agreement”). to the FGL Merger Agreement, except for certain shares specified in the FGL Merger Agreement, each issued and outstanding share of common stock of FGL was automatically cancelled and converted into the right to receive $31.10 in cash, without interest.

Also on November 30, 2017, Front Street Re (Delaware) Ltd. (“Front Street” and together with FGL, the “Insurance Operations”), a wholly owned subsidiary of HRG, sold to the CF Entities all of the issued and outstanding shares of Front Street Re Cayman Ltd. and Front Street Re Ltd.(the “Front Street Sale”) to a previously disclosed Share Purchase Agreement. The purchase price for the sale was $65.0 million, subject to reduction for customary transaction expenses. In addition, $6.5 million of the purchase price was deposited in escrow for a period of 15 months to support any indemnification claims that might be made (if any) against Front Street by the CF Entities.

In addition, as previously disclosed, on May 24, 2017, HRG, FS HoldcoII Ltd. (“FS Holdco”) and the CF Entities entered into an agreement (the “338 Agreement”) to which the CF Entities agreed that FS Holdco may, at its option, cause the relevant CF Entity and FS Holdco to make a joint election under Section 338(h)(10) of the Internal Revenue Code of 1986, as amended, with respect to the FGL Merger and the deemed share purchases of FGL’s subsidiaries (the “338 Tax Election”). to the 338 Agreement, if FS Holdco elects to make the 338 Tax Election, FS Holdco and/or CF Corporation will be required to make a payment for the election to the other. More specifically, FS Holdco will be required to pay CF Corporation$30.0 million, plus the amount, if any, by which FGL’s and its subsidiaries’ incremental current tax costs that are attributable to such election exceed $6.0 million, and CF Corporation will be required to pay FS Holdco the amount, if any, by which FGL’s and its subsidiaries’ incremental current tax savings that are attributable to such election exceed $6.0 million. to the 338 Agreement, FS Holdco may elect to exercise the 338 Tax Election at any time until 10 business days after final calculation of such incremental tax costs or savings, as the case may be, and it currently expects to exercise such election within such period. If FS Holdco exercises the 338 Tax Election, as of September 30, 2017, HRG expects to receive an estimated$9.6 millionnet payment from CF Corporation.Nonetheless, there can be no assurance that FS Holdco will make the election and/or that HRG will receive the expected benefits of such election. In addition, the estimated payment described herein is preliminary as of September 30, 2017 and subject to change, and HRG does not undertake any obligation to update such estimate.

(a) Financial Statements of Businesses Acquired

Not applicable.

(b) Pro Forma Financial Information

to Article 11 of Regulation S-X, filed as Exhibit 99.1 to this report and incorporated herein, are (i) Unaudited Pro Forma Condensed Consolidated Balance Sheet of the Company as of September30, 2017, as if the Insurance Operations Transactions had occurred as of that date, (ii) Unaudited Pro Forma Condensed Consolidated Statements of Operations of the Company for the years ended September30, 2017, 2016 and 2015, as if the Insurance Operations Transactions had occurred on October 1, 2014, and the related notes thereto.

(c) Shell Company Transactions

Not applicable.

(d) Exhibits

HRG GROUP, INC. Exhibit
EX-99.1 2 ex991.htm EXHIBIT 99.1 Exhibit Exhibit 99.1 HRG GROUP,…
To view the full exhibit click here

About HRG GROUP, INC. (NYSE:HRG)

HRG Group, Inc. is a holding company. The Company operates through two segments: Consumer Products and Insurance. The Consumer Products segment consists of the Company’s subsidiary, Spectrum Brands Holdings, Inc. (Spectrum Brands). The Insurance segment includes its subsidiary, Front Street Re (Delaware) Ltd. (Front Street). Through Spectrum Brands, the Company is a diversified global branded consumer products company. The Company offers seven product categories: consumer batteries, small appliances, global pet supplies, home and garden control products, personal care products, hardware and home improvement products and global auto care. Through Front Street, the Company is engaged in the business of providing long-term reinsurance, including reinsurance to the specialty insurance sector of fixed, deferred and payout annuities. The Company’s subsidiary, Fidelity & Guaranty Life (FGL), provides life insurance and annuity products.