Date of report (Date of earliest event reported): January 7, 2011




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Table of Contents

 

 

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): January 7, 2011

HARBINGER GROUP INC.

(Exact Name of Registrant as Specified in Its Charger)

 

Delaware

(State or Other Jurisdiction of Incorporation)
 

 

 

 

1-4219

 

74-1339132

 

(Commission File Number)

 

(IRS Employer Identification No.)




 

 

 

450 Park Avenue, 27th Floor, New York, New York

 

10022

 

(Address of Principal Executive Offices)

 

(Zip Code)

(212) 906-8555

(Registrant’s Telephone Number, Including Area Code)

(Former Name or Former Address, if Changed Since Last Report)
 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

 

 

o

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

 

 

o

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

 

 

o

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 




TABLE OF CONTENTS

 

 

 

 

 

 

 

 

 

Item 1.01 Entry into a Material Definitive Agreement

Item 2.01 Completion of Acquisition or Disposition of Assets

Item 3.02. Unregistered Sales of Equity Securities

Item 4.01. Changes in Registrant’s Certifying Accountant

Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year

Item 5.06. Change in Shell Company Status

Item 8.01 Other Events

Item 9.01 Financial Statements and Exhibits

SIGNATURES

EX-16.1

EX-99.1

EX-99.2

EX-99.3

EX-99.4

EX-99.5

EX-99.6

EX-99.7

EX-99.8

EX-99.9

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Item 1.01 Entry into a Material Definitive Agreement.

     The disclosure in Item 2.01 of this Current Report on Form 8-K (the “Current Report”) is incorporated herein by reference.

Item 2.01 Completion of Acquisition or Disposition of Assets.

     Spectrum Brands Acquisition

     On January 7, 2011 (the “Closing Date”), Harbinger Group Inc., a Delaware corporation (“HGI” or the “ Company ”), completed the acquisition (the “ Spectrum Brands Acquisition ”) of an aggregate of 27,756,905 shares of common stock (the “ SB Holdings Contributed Shares ”), $0.01 par value per share (“ SB Holdings common stock ”), of Spectrum Brands Holdings, Inc., a Delaware corporation (“ SB Holdings ”), owned by the Harbinger Parties (as defined herein), pursuant to the terms of the Contribution and Exchange Agreement, dated as of September 10, 2010 (as amended, the “ Exchange Agreement ”), entered into by and among the Company and Harbinger Capital Partners Master Fund I, Ltd., a Cayman Islands exempted company (the “ Master Fund ”), Harbinger Capital Partners Special Situations Fund, L.P., a Delaware limited partnership (the “ Special Situations Fund ”), and Global Opportunities Breakaway Ltd., a Cayman Islands exempted company (the “ Breakaway Fund ” and, collectively with the Master Fund and the Special Situations Fund, the “ Harbinger Parties ”). In exchange for the SB Holdings Contributed Shares, the Company issued an aggregate of 119,909,829 shares of its common stock, $0.01 par value per share (“ HGI common stock ”), to the Harbinger Parties. The exchange ratio of 4.32 to 1.00 was based on the respective volume weighted average trading prices of HGI common stock ($6.33) and SB Holdings common stock ($27.36) on the New York Stock Exchange (the “ NYSE ”) for the 30 trading days from and including July 2, 2010 to and including August 13, 2010, the day HGI received the Harbinger Parties’ proposal for the Spectrum Brands Acquisition.

     The consummation of the Spectrum Brands Acquisition resulted in the following as of the date of this Current Report: (i) HGI owns approximately 54.4% of the outstanding SB Holdings common stock, (ii) SB Holdings became HGI’s majority-owned subsidiary and its financial results will be consolidated with HGI’s financial results in HGI’s financial statements, (iii) the Master Fund owns 6,500,000 shares of SB Holdings common stock, or approximately 12.7% of the outstanding shares of SB Holdings common stock, (iv) the remaining 32.9% of the outstanding SB Holdings common stock continue to be owned by stockholders of SB Holdings who are not affiliated with the Harbinger Parties, and (v) the Harbinger Parties together own 129,859,890 shares of HGI common stock, or approximately 93.3% of the outstanding HGI common stock. SB Holdings common stock continues to be traded on the NYSE under the symbol “SPB”.

     Following the consummation of the Spectrum Brands Acquisition, HGI continues as a holding company that is focused on obtaining significant equity stakes in subsidiaries that operate across a diversified set of industries. HGI views the Spectrum Brands Acquisition as a first step in this process. See below for a description of SB Holdings’ business.

     Immediately prior to the consummation of the Spectrum Brands Acquisition, the Harbinger Parties held the controlling financial interests in both HGI and SB Holdings. As a result, the Spectrum Brands Acquisition will be considered a transaction between entities under common control under ASC Topic 805 — “Business Combinations”, and is being accounted for similar to the pooling of interest method. SB Holdings will be reflected as the predecessor and receiving entity in HGI’s financial statements. HGI’s financial statements will be retrospectively adjusted to reflect as HGI’s historical financial statements those of SB Holdings and Spectrum Brands, Inc., a wholly-owned subsidiary of SB Holdings (“ Spectrum Brands ”). SB Holdings was formed and acquired 100% of both Russell Hobbs, Inc., now a wholly-owned subsidiary of Spectrum Brands (“ Russell Hobbs ”), and Spectrum Brands in exchange for issuing an approximately 65% controlling financial interest to the Harbinger Parties and an approximately 35% non-controlling financial interest to other stockholders (other than the Harbinger Parties) (this transaction is referred to as the “ SB/RH Merger ”). As Spectrum Brands was the accounting acquirer in the SB/RH Merger, the financial statements of Spectrum Brands will be included as HGI’s predecessor entity for periods preceding the SB/RH Merger.

     The issuance of shares of HGI common stock to the Harbinger Parties pursuant to the Exchange Agreement and the acquisition by HGI of the SB Holdings Contributed Shares were not registered under the Securities Act of 1933, as amended (the “ Securities Act ”). These shares are restricted securities under the Securities Act. HGI may not be able to sell the SB Holdings Contributed Shares and the Harbinger Parties may not be able to sell their HGI common stock acquired pursuant to the Exchange Agreement except pursuant to: (i) an effective registration statement under the Securities Act covering the resale of those shares, (ii) Rule 144 under the Securities Act, which requires a specified holding period and limits the manner and volume of sales, or (iii) any other applicable exemption under the Securities Act.

     The foregoing description of the Exchange Agreement is qualified in its entirety by reference to the Exchange Agreement, which was filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K (File No. 001-04219) filed with the U.S. Securities and Exchange Commission (the “ SEC ”) on September 14, 2010 (“ September Form 8-K ”), and Amendment to the Exchange Agreement, dated as of November 5, 2010, entered into by and among the Company and the Harbinger Parties, which was filed as Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q (File No. 001-04219) filed with the SEC on November 9, 2010, which agreements are incorporated into this Current Report by reference.

     The Company, as a nominal defendant, and the members of its board of directors are named as defendants in a derivative action filed in December 2010 by Alan R. Kahn in the Delaware Court of Chancery. The plaintiff alleges that the Spectrum Brands Acquisition is financially unfair to the Company and its public stockholders and seeks unspecified damages and rescission of the transaction. The Company believes the allegations are without merit and intends to vigorously defend this matter.
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     Lock-Up Letter

     In connection with the closing of the Spectrum Brands Acquisition, the Harbinger Parties delivered to HGI a lock-up letter (the “ Lock-Up Letter ”). Pursuant to the Lock-Up Letter, the Harbinger Parties agreed that, for a period of 90 days from the Closing Date, they will not without the prior written consent of HGI, directly or indirectly, (i) offer, pledge, sell, contract to sell, sell or grant any option, right or, warrant for the sale of, or otherwise dispose of or transfer any of their SB Holdings common stock owned beneficially or as of record on the Closing Date (the “ Subject Shares ”) or any securities convertible into or exchangeable or exercisable for the Subject Shares (collectively, the “ Lock-Up Securities ”), or exercise any right with respect to the registration of any of the Lock-Up Securities, or file or cause to be filed any registration statement in connection therewith under the Securities Act, or (ii) enter into any swap or any other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of the Lock-Up Securities, whether any such swap or transaction is to be settled by delivery of the SB Holdings common stock or other securities, in cash or otherwise (each transaction described in the preceding clauses (i) and (ii), a “ Transfer ”).

     The restrictions contained in the Lock-Up Letter do not apply to (i) any Transfer of the Lock-Up Securities pursuant to the Exchange Agreement, (ii) any Transfer of the Lock-Up Securities to an affiliate of the Harbinger Parties, (iii) any pledge by the Harbinger Parties of the Lock-Up Securities in favor of a lender or other similar financing source, and (iv) any Transfer or distribution by the Harbinger Parties of the Lock-Up Securities to their limited partners, members or stockholders; provided , that in the case of any Transfer described in the preceding clause (ii), such affiliate delivers a signed written agreement accepting the restrictions set forth in the Lock-Up Letter as if it were a Harbinger Party for the balance of the lock-up period. The restrictions of the Lock-Up Letter do not apply to any Lock-Up Securities acquired by the Harbinger Parties after the Closing Date.

     The foregoing description of the Lock-Up Letter is qualified in its entirety by reference to the Lock-Up Letter, the form of which was filed as Exhibit 10.1 to the September Form 8-K and is incorporated into this Current Report by reference.

     HGI Registration Rights Agreement

     In connection with the Exchange Agreement, on September 10, 2010 HGI and the Harbinger Parties entered into a registration rights agreement (the “ HGI Registration Rights Agreement ”). Pursuant to the HGI Registration Rights Agreement and effective on the Closing Date, the Harbinger Parties, among other things and subject to the terms and conditions set forth therein, have certain demand and so-called “piggy back” registration rights with respect to (i) any and all shares of HGI common stock owned after September 10, 2010 by the Harbinger Parties and their permitted transferees (irrespective of when acquired) and any shares of HGI common stock issuable or issued upon exercise, conversion or exchange of HGI’s other securities owned by the Harbinger Parties, and (ii) any HGI securities issued in respect of HGI common stock issued or issuable to any of the Harbinger Parties with respect to those securities described in the preceding clause (i).

     Under the HGI Registration Rights Agreement, any of the Harbinger Parties may demand that HGI register all or a portion of such Harbinger Party’s HGI common stock for sale under the Securities Act, so long as the anticipated aggregate offering price of the securities to be offered is (i) at least $30 million if registration is to be effected pursuant to a Registration Statement on Form S-1 or any similar “long-form” registration or (ii) at least $5 million if registration is to be effected pursuant to a registration statement on Form S-3 or a similar “short-form” registration. Under the HGI Registration Rights Agreement, HGI is not obligated to effect more than three such “long-form” registrations in the aggregate for all of the Harbinger Parties.

     The HGI Registration Rights Agreement also provides that if HGI decides to register shares of HGI common stock for its own account or the account of a stockholder other than the Harbinger Parties (subject to certain exceptions set forth in the HGI Registration Rights Agreement), the Harbinger Parties may require HGI to include all or a portion of their shares of HGI common stock in the registration and, to the extent the registration is in connection with an underwritten public offering, to have such shares of HGI common stock included in the offering.

     The foregoing description of the HGI Registration Rights Agreement is qualified in its entirety by reference to the HGI Registration Rights Agreement, which was filed as Exhibit 10.2 to the September Form 8-K and is incorporated into this Current Report by reference.

     SB Holdings Stockholder Agreement

     In connection with the closing of the Exchange Agreement, on September 10, 2010 HGI signed, and on the Closing Date became a party to, the existing Stockholder Agreement, dated as of February 9, 2010 (the “ SB Holdings Stockholder Agreement ”), by and among the Harbinger Parties and SB Holdings. Pursuant to the SB Holdings Stockholder Agreement, the parties agreed that, among other things and subject to the terms and conditions set forth therein:


 



 

SB Holdings will maintain (i) a special nominating committee (the “Special Nominating Committee ”) of its board of directors consisting of three Independent Directors (as defined in the SB Holdings Stockholder Agreement), (ii) a

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nominating and corporate governance committee of its board of directors (the “Nominating and Corporate Governance Committee ”) and (iii) an Audit Committee in accordance with the NYSE rules;

 

 

 

 

 



 

for so long as HGI (together with HGI’s affiliates, including the Harbinger Parties) own 40% or more of SB Holdings’ outstanding voting securities, HGI will vote its shares of SB Holdings common stock to effect the structure of SB Holdings’ board of directors described in the SB Holdings Stockholder Agreement and to ensure that SB Holdings’ Chief Executive Officer is elected to its board of directors;

 

 

 

 

 



 

neither SB Holdings nor any of its subsidiaries will be permitted to pay any monitoring or similar fee to HGI or its affiliates, including the Harbinger Parties;

 

 

 

 

 



 

HGI will not effect any transfer of SB Holdings’ equity securities to any person that would result in such person and its affiliates owning 40% or more of SB Holdings’ outstanding voting securities, unless (i) such person agrees to be bound by the terms of the SB Holdings Stockholder Agreement, (ii) the transfer is pursuant to a bona fide acquisition of SB Holdings approved by SB Holdings’ board of directors and a majority of the members of the Special Nominating Committee, (iii) the transfer is otherwise specifically approved by SB Holdings’ board of directors and a majority of the Special Nominating Committee, or (iv) the transfer is of 5% or less of SB Holdings’ outstanding voting securities;

 

 

 

 

 



 

before June 16, 2011, HGI will not (and HGI will not permit any of its affiliates, including the Harbinger Parties, to) make any public announcement with respect to, or submit a proposal for, or offer in respect of a going-private transaction of SB Holdings unless such action is specifically requested in writing by the board of directors of SB Holdings with the approval of a majority of the members of the Special Nominating Committee. In addition, under the SB Holdings’ certificate of incorporation, no stockholder that (together with its affiliates) owns 40% or more of the outstanding voting securities of SB Holdings (the “ 40% Stockholder ”) shall, or shall permit any of its affiliates or any group which such 40% Stockholder or any person directly or indirectly controlling or controlled by such 40% Stockholder is a member of, engage in any transactions that would constitute a going-private transaction, unless such transaction satisfies certain requirements;

 

 

 

 

 



 

HGI will have certain inspection rights so long as HGI and its affiliates, including the Harbinger Parties, own, in the aggregate, at least 15% of the outstanding SB Holdings’ voting securities; and

 

 

 

 

 



 

HGI will have certain rights to obtain SB Holdings information, at HGI’s expense, for so long as HGI owns at least 10% of the outstanding SB Holdings’ voting securities.

     The provisions of the SB Holdings Stockholder Agreement (other than with respect to information and investigation rights) will terminate on the date on which HGI and its affiliates (including the Harbinger Parties) no longer beneficially own 40% of the outstanding SB Holdings’ voting securities. The SB Holdings Stockholder Agreement terminates when any person or group owns 90% or more of the outstanding SB Holdings’ voting securities. The SB Holdings Stockholder Agreement cannot be amended without the approval of the parties thereto and cannot be waived without the approval of the party against whom the waiver is to be effective; provided that no such amendment or waiver will be effective without approval of a majority of the members of the Special Nominating Committee.

     The foregoing description of the SB Holdings Stockholder Agreement is qualified in its entirety by reference to the SB Holdings Stockholder Agreement, which was filed as Exhibit 99.1 to the Company’s Current Report on Form 8-K (File No. 001 — 04219) filed with the SEC on November 5, 2010 (the “ November Form 8-K ”) and is incorporated into this Current Report by reference.

     SB Holdings Registration Rights Agreement

     In connection with the Exchange Agreement, on September 10, 2010 HGI signed, and on the Closing Date became a party to, the existing Registration Rights Agreement, dated as February 9, 2010 (the “ SB Holdings Registration Rights Agreement ”), by and among the Harbinger Parties, SB Holdings, and Avenue International Master, L.P. (“ Avenue International Master ”), Avenue Investments, L.P. (“ Avenue Investments ”), Avenue Special Situations Fund IV, L.P. (“ Avenue Fund IV ”), Avenue Special Situations Fund V, L.P. (“ Avenue Fund V ”) and Avenue-CDP Global Opportunities Fund, L.P. (“ CDP Global ” and collectively with Avenue International Master, Avenue Investments, Avenue Fund IV and Avenue Fund V, the “ Avenue Parties ”). Pursuant to the SB Holdings Registration Rights Agreement, HGI has, among other things and subject to the terms and conditions set forth therein, certain demand and so-called “piggy back” registration rights with respect to HGI’s shares of SB Holdings common stock.

     Under the SB Holdings Registration Rights Agreement, HGI, the Harbinger Parties or the Avenue Parties may demand that SB Holdings register all or a portion of HGI’s or their respective SB Holdings common stock for sale under the Securities Act, so long as the anticipated aggregate offering price of the securities to be offered is (i) at least $30 million if registration is to be effected pursuant to a Registration Statement on Form S-1 or a similar “long-form” registration or (ii) at least $5 million if registration is to be effected pursuant to a Registration Statement on Form S-3 or a similar “short-form” registration.

     The SB Holdings Registration Rights Agreement also provides that if SB Holdings decides to register shares of its common stock for its own account or the account of a stockholder other than HGI, the Harbinger Parties and the Avenue Parties (subject to certain exceptions set forth in the agreement), HGI, the Harbinger Parties or the Avenue Parties may require SB Holdings to include all or a

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portion of their shares of SB Holdings common stock in the registration and, to the extent the registration is in connection with an underwritten public offering, to have such shares of SB Holdings common stock included in the offering.

     The foregoing description of the SB Holdings Registration Rights Agreement is qualified in its entirety by reference to the SB Holdings Stockholder Agreement, which was filed as Exhibit 99.2 to the November Form 8-K and is incorporated into this Current Report by reference.

     Release of Escrow Proceeds

     On November 15, 2010, HGI completed its previously announced offering (the “Offering”) of $350.0 million aggregate principal amount of 10.625% senior secured notes due 2015 (the “ Notes ”). The net proceeds of the Notes were released to HGI from a segregated escrow account upon consummation of the Spectrum Brands Acquisition. HGI intends to use the net proceeds from the Offering for general corporate purposes, which may include acquisitions and other investments.
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