|HRG GROUP, INC. filed this Form 8-K on 02/07/2017|
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Our Consumer Products segment’s adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA - Consumer Products”) increased by $7.1 million, or 3.4%, to $214.2 million versus the Fiscal 2016 Quarter. The increase was primarily driven by $5.5 million improvements in the hardware and home improvement product line due to increase in net sales, cost improvements and product mix.
After the close of the Fiscal 2017 Quarter, on January 24, 2017, Spectrum Brands announced that its Board of Directors declared a quarterly dividend of $0.42 per share on Spectrum Brands’ common stock, which represents an increase of 10.5% compared to the previous quarterly dividend of $0.38 per share. Over the past three years, the quarterly dividend that Spectrum Brands has paid to its common stockholders has increased 40%.
Also on January 24, 2017, Spectrum Brands announced that its Board of Directors authorized a new three-year, $500 million program to repurchase shares of Spectrum Brands common stock. The common stock repurchase authorization was effective January 24, 2017 and replaces an existing three-year, $300 million common stock repurchase program scheduled to expire in July 2018. The repurchase program may be suspended or discontinued at any time at the discretion of Spectrum Brands.
For the Fiscal 2017 Quarter, the Insurance segment revenues decreased $18.7 million to a loss of $28.7 million from a loss of $10.0 million for the Fiscal 2016 Quarter. The decrease in Insurance segment revenues was primarily driven by a decrease in the fair value of the underlying fixed maturity debt securities included in the funds withheld receivables during the Fiscal 2017 Quarter due to market conditions with increasing risk-free rates and widening credit spreads resulting in generally lower valuations of fixed maturity debt securities coupled with credit impairment losses due to intercompany investments.
The operating loss of $15.4 million for the Fiscal 2017 Quarter reflected a decrease of $15.4 million from the break-even operating income reported for the Fiscal 2016 Quarter driven by lower revenues as discussed above and partially offset by a decrease in benefits and other policy changes reserves mainly due to an increase in the insurance liability discount rate as compared to the Fiscal 2016 Quarter.
Certain Other Items:
HRG Strategic Review Process
As previously disclosed, HRG has initiated a process to explore strategic alternatives with a view to maximizing shareholder value. Strategic alternatives may include, but are not limited to, a merger, sale or other business combination involving the Company and/or its assets. HRG has not set a definitive schedule to complete its review of strategic alternatives and does not intend to provide any further updates until such time as it determines in its sole discretion, as required by law and/or it has entered into definitive documentation with respect to any strategic transaction. There can be no assurance that this process will result in a transaction, or if a transaction is undertaken, as to its terms or timing. In light of the strategic review process, HRG has elected to discontinue hosting quarterly conference calls.
FGL and Anbang Merger
On November 8, 2015, FGL entered into an Agreement and Plan of Merger (as amended, the “FGL Merger Agreement”, and the merger contemplated thereby, the “FGL Merger”) with Anbang Insurance Group Co., Ltd., and its subsidiaries, AB Infinity Holding, Inc. and AB Merger Sub, Inc. On November 3, 2016, the FGL Merger Agreement was amended to extend the outside termination date for the completion of the Merger from November 7, 2016 to February 8, 2017. Accordingly, either party may terminate the FGL Merger Agreement if the closing of the FGL Merger does not occur on or prior to February 8, 2017. As of the date hereof, the parties to the FGL Merger Agreement were in discussions regarding an extension of the outside termination date beyond February 8, 2017. It is expected that FGL will make an announcement on or about February 9, 2017 regarding the outcome of those discussions.
Corporate Financing Activity
On January 13, 2017, subsequent to the end of the fiscal quarter, the Company, through its wholly-owned subsidiaries, entered into a loan (the “2017 Loan”), pursuant to which it may borrow up to an aggregate amount of $150.0 million. The 2017 Loan bears interest at an adjusted International Exchange London Interbank Offered Rate (“LIBOR”), plus
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