Premium Valuation Reflects Opportunity Ahead
Investment to be Put Toward Reducing Outstanding Borrowings,
Strengthening Balance Sheet and Accelerating Strategic
Growth
NEW YORK, March 15, 2019 /CNW/ -- (NASDAQ:
MDCA) – MDC Partners Inc. ("MDC Partners" or the "Company")
announced today that it has entered into an agreement with The
Stagwell Group pursuant to which Stagwell, a private equity firm
that manages investments in new media and digital marketing
services, has invested $100 million
in MDC Partners through the purchase of $50
million in MDC Partners common shares and $50 million non-voting convertible preference
shares. In connection with the transaction, industry veteran
Mark Penn will join MDC Partners as
Chief Executive Officer and a member of its Board of Directors.
This represents the conclusion of the strategic review process
and CEO search that were initiated in September, 2018.
Presiding Director of the MDC Partners Board of Directors,
Irwin Simon, commented, "After a
thorough review process, consultation with our advisors and careful
consideration of our objectives, we are delighted to welcome both
Mark as CEO of MDC Partners, and The Stagwell Group as a long-term
strategic investor. Throughout his career, Mark has proven himself
a powerful strategic operator and passionate supporter of agencies.
He shares our vision and our values, and his background as a
marketer, agency founder, global thought leader and investor will
be critical to bolstering our structure, solutions and
services.
"At the same time, the financial flexibility and resources
provided by this investment will allow for a strengthened capital
structure as well as the liquidity to selectively invest behind our
world-class talent while focusing on high-priority growth areas. We
are thrilled that this investment and Mark's leadership will help
MDC Partners reinforce its position as inspiring change-agent in
our industry and home to extraordinary talent."
"I have admired MDC for a long time and believe wholeheartedly
in its mission," said Mr. Penn. "MDC is home to some of the world's
best creative and strategic talent; strategists with a deep
understanding of the way technology and media solutions address the
needs of today's modern marketer. Its agencies share an impressive
entrepreneurial culture and the network as a whole is steeped in
untapped potential. I am eager to begin applying not only our
investment and resources, but also a plan based on my expertise,
towards growth and the creation of significant value for our
shareholders."
Mr. Penn brings to MDC Partners over 40 years of experience in
research, advertising, public relations, polling and consulting.
Before founding The Stagwell Group, Mr. Penn served in senior
executive positions at Microsoft, where as Executive Vice President
and Chief Strategy Officer, he was responsible for working on core
strategic issues across Microsoft's products, value propositions
and investments and leading the company's competitive research and
analysis. Mr. Penn also oversaw Microsoft's $2 billion advertising budget. Prior to
Microsoft, Mr. Penn was the co-founder and CEO of Penn Schoen
Berland, a global market research firm that he built and sold to
WPP. At WPP, he also became CEO of Burson-Marsteller, and managed the two companies to
record profit growth. Mr. Penn has also served as a senior adviser
to global corporate and political leaders including Bill Gates and Steve
Ballmer, Bill Ford, U.K.
Prime Minister Tony Blair, and
Senator Hillary Rodham Clinton and
President Bill Clinton.
As CEO of MDC Partners, Mr. Penn will lead all day-to-day
operations at MDC. Upon closing of the transaction, he will
continue to oversee investments at The Stagwell Media LP
fund.
Terms
The Stagwell Group has purchased 14,285,714 Class A shares of
the Company (the "Class A Shares") for $50
million, or $3.50 per share,
which represents an 18% premium to the 30-day average closing price
of $2.96 per share. In addition, the
Stagwell Group has purchased $50
million of convertible preferred shares with a $5.00 conversion price (the "Preference Shares").
Following the transaction, the Stagwell Group owns approximately
19.5% of the outstanding common equity of the Company. Assuming the
full conversion of the Preference Shares into the Company's Class A
shares, the Stagwell Group will own approximately 29.2% of the
outstanding equity of the Company. Assuming conversion of both the
Stagwell Group Preference Shares and the currently outstanding
Goldman Sachs preference shares which were issued in 2017, the
Stagwell Group will own approximately 24.8% of the outstanding
equity of the Company. The Preference Shares have a liquidation
preference that accretes at a rate of 8.0% per annum, compounded
quarterly until conversion on the five-year anniversary of the
issuance date of the Preference Shares.
MDC Partners expects to use the net proceeds from the investment
to pay down existing debt under the Company's credit facility and
for general corporate purposes.
About MDC Partners Inc.
MDC Partners is one of the
most influential marketing and communications networks in the
world. As "The Place Where Great Talent Lives," MDC Partners is
celebrated for its innovative advertising, public relations,
branding, digital, social and event marketing agency partners,
which are responsible for some of the most memorable and effective
campaigns for the world's most respected brands. By leveraging
technology, data analytics, insights and strategic consulting
solutions, MDC Partners drives creative excellence, business growth
and measurable return on marketing investment for over 1,700
clients worldwide. For more information about MDC Partners and its
partner firms, visit our website at www.mdc-partners.com and follow
us on Twitter at http://www.twitter.com/mdcpartners.
Media/Investor Contact:
Alexandra Delanghe
MDC Partners
646-429-1845
adelanghe@mdc-partners.com
Erica Bartsch
Sloane & Company
212-446-1875
IR@mdc-partners.com
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SOURCE MDC Partners Inc.