BOSTON (Reuters) - HC2 Holdings Inc (HCHC.N) said on Thursday that it reached a settlement with activist investor MG Capital to bring four newcomers onto the board of the company being run by former hedge fund manager Philip Falcone.
The settlement brings to an end a proxy contest between a first-time activist Michael Gorzynski, who runs MG Capital, and Falcone, who cemented his fame with bets against the housing market during the last financial crisis.
Gorzynski had criticized Falcone’s handpicked board for poor governance, conflicts of interest and missing regulatory issues, and pushed to have him removed. Gorzynski said he wanted to cut the company’s annual costs and refocus on HC2’s core holdings.
MG Capital, which pushed to replace the entire board, has received two seats with the first one going to Gorzynski and the second to Kenneth Courtis, who was one of MG’s six director candidates, according to the agreement.
Additionally, Avram “Avie” Glazer, an investor with a roughly 5.3% stake in HC2, also joined the board and was named its chairman.
HC2 said last month that it planned to put Glazer, who is the executive co-chairman and director of soccer club Manchester United Plc (MANU.N), onto its slate for shareholders to vote on at the annual meeting in July.
The fourth board seat has gone to Shelly Lombard, a representative of HC2 shareholder JDS1.
After new additions, the board would expand to 10 members from six and would be reduced to seven after this year’s annual meeting in July, the company said in a statement.
As part of the settlement, MG Capital has also withdrawn its consent solicitation and nomination for election of directors at the 2020 annual meeting.
MG Capital could not be immediately reached for comment.
Reuters reported on Wednesday that the two sides were nearing a settlement.
This was one of only a few campaigns that had not settled quickly this year as the coronavirus outbreak shuttered much of the U.S. economy.
It pitted Gorzynski, who once worked for prominent hedge fund manager Daniel Loeb, against Falcone, a former billionaire whose bet against the overheated housing market earned his fund Harbinger Capital a 116% return in 2007.
In the last decade, Falcone has turned from fund investor to corporate executive.
Warren Gfeller, currently the interim non-executive chairman and who has been on the HC2 board since 2016, and Wayne Barr, who has been a director since 2014, will continue to serve as directors, according to the statement.
Proxy advisers ISS and Glass Lewis both supported MG’s campaign, with ISS, the bigger and more influential of the two, recommending that shareholders elect three MG directors but not Gorzynski. Glass Lewis, in an rare move, backed all six MG directors to replace the entire board.
Reporting by Svea Herbst-Bayliss; Additional reporting by Rebekah Mathew in Bangalore; Editing by Shri Navaratnam, Christopher Cushing and Rashmi Aich