Hagerty commences warrant exchange offer and consent solicitation

Classic car insurer Hagerty has initiated an exchange offer and consent solicitation for its outstanding warrants. This move aims to simplify Hagerty’s capital structure and reduce the potential dilutive impact of the warrants.

Key details:

• Warrants involved:
  • Public Warrants
  • Private Placement Warrants
  • Underwriter Warrants
  • OTM Warrants
  • PIPE Warrants

Exchange offer:

• Hagerty is offering 0.20 shares of Class A Common Stock for each outstanding warrant tendered.
• Up to 3,896,707 shares of Class A Common Stock are available in exchange.

Consent solicitation:

• Hagerty seeks to amend the warrant agreements to allow a mandatory exchange of each warrant for 0.18 shares.
• Consent thresholds:
  • 50% of Public Warrants and 50% of Private Placement Warrants.
  • 50% of PIPE Warrants.
• Current support:
  • 44.3% of Public Warrants
  • 57.2% of Private Placement Warrants
  • 81.5% of PIPE Warrants

Important dates:

• The offer and solicitation period will expire one minute after 11:59 p.m. ET on July 2, 2024, unless extended.

Additional info:

• The offer and solicitation are outlined in the prospectus/offer to exchange and Schedule TO filed with the SEC.
• Hagerty’s Class A Common Stock and Public Warrants trade on the NYSE under “HGTY” and “HGTY.WS”.
• As of May 15, 2024, Hagerty has:
  • 85.7 million shares of Class A Common Stock
  • 8.5 million shares of Series A Preferred Stock
  • 251 million shares of Class V Common Stock
  • 19.5 million Warrants outstanding
• Expected outcome:
  • Issuance of up to 3.9 million shares, increasing Class A Common Stock to approximately 89.6 million shares
  • Elimination of all outstanding warrants

Bottom Line: This strategic move by Hagerty aims to streamline its financial structure and minimize potential dilution, but it hinges on significant consent from warrant holders.