Seaport Entertainment Group Announces Commencement of Rights Offering

Rhea-AI Summary

Seaport Entertainment Group (NYSE American: SEG) has commenced its previously announced $175.0 million rights offering to purchase up to 7,000,000 shares of its common stock. The offering gives stockholders as of September 20, 2024 (Record Date) the opportunity to subscribe for newly issued shares at $25.00 per share. Each stockholder will receive one right for each outstanding share owned, with each right entitling the holder to purchase 1.267683 shares.

The rights offering is backstopped by Pershing Square Capital Management, ensuring gross proceeds of $175.0 million. Trading of rights on NYSE American will begin on September 24, 2024, under the symbol "SEG RT". The offering will expire on October 10, 2024, unless extended. SEG plans to use the proceeds for general operating, working capital, and other corporate purposes.

Positive

• Rights offering provides $175.0 million in potential capital
• Backstop agreement with Pershing Square ensures full subscription
• Existing shareholders have opportunity to maintain ownership percentage

Negative

• Potential dilution for shareholders who do not participate in the offering
• Share price set at $25.00 may be below or above market value at time of offering

Insights

Financial Analyst

Seaport Entertainment Group's $175 million rights offering is a significant capital raise that could substantially impact the company's financial position. With a current market cap of $183.7 million, this offering could nearly double the company's available capital.

Key points to consider:

• The $25 per share subscription price represents a 13.6% premium to the current stock price, which may deter some investors from participating.
• Existing shareholders have the opportunity to maintain their ownership percentage, but those who don't participate will face dilution.
• The backstop agreement with Pershing Square ensures the full $175 million will be raised, providing certainty for the company's plans.
• The additional capital could be used for expansion, debt reduction, or strategic acquisitions in the entertainment and hospitality sectors.

While the capital raise is positive for the company's growth prospects, the dilution and premium pricing may put short-term pressure on the stock price. Long-term investors should evaluate the company's plans for utilizing the funds to determine the potential for future value creation.

Legal Expert

The rights offering by Seaport Entertainment Group presents several legal and regulatory considerations:

• The offering is being conducted under an SEC-registered Form S-1, ensuring compliance with federal securities laws.
• Transferable subscription rights allow for a fair distribution among existing shareholders, potentially mitigating legal challenges related to shareholder rights.
• The backstop agreement with Pershing Square could raise questions about control and influence, potentially triggering regulatory scrutiny under antitrust laws if Pershing Square's ownership significantly increases.
• The company's careful language regarding not making recommendations to shareholders about exercising rights is prudent to avoid potential liability for investment advice.

From a governance perspective, the board's decision to pursue this capital raise method demonstrates a balance between raising necessary funds and providing existing shareholders the opportunity to maintain their proportional ownership. However, shareholders should carefully review the prospectus for full disclosure of risks and use of proceeds to make informed decisions.

NEW YORK--(BUSINESS WIRE)-- Seaport Entertainment Group Inc. (NYSE American: SEG) (the “Seaport Entertainment Group,” “SEG” or “Company”) announced today that it has commenced its previously announced $175.0 million rights offering (the “Rights Offering”) to purchase up to 7,000,000 shares of its common stock.

The Rights Offering gives Company stockholders as of the Record Date (as defined below) the opportunity to subscribe for their basic subscription amount of newly issued shares of the Company’s common stock in proportion to their respective existing ownership amounts as of the Record Date. Company stockholders who exercise their respective full basic subscription rights will have an over-subscription privilege giving such Company stockholders the option to subscribe for any shares of common stock that remain unsubscribed at the expiration of the Rights Offering, subject to certain ownership limitations. If the aggregate subscriptions (basic subscriptions plus over-subscriptions) exceed the amount offered in the Rights Offering, then the aggregate over-subscription amount will be pro-rated among the Company stockholders exercising their respective over-subscription privileges based on the basic subscription amounts of such stockholders.

The Company is distributing to each holder of the Company’s common stock as of 5:00 PM, New York time, on September 20, 2024 (the “Record Date”), transferable subscription rights (the “Rights”) to purchase shares of the Company’s common stock at a subscription price of $25.00 per share. Each Record Date stockholder will be issued one Right for each outstanding share of the Company’s common stock owned on the Record Date. Each Right will entitle the holder to purchase 1.267683 shares of common stock. The Company will not issue fractional shares of common stock. Any fractional shares of common stock that would be created by the exercise of Rights will be rounded down to the nearest whole share, and any excess payments in respect thereof will be returned.

The Rights Offering is being backstopped by investment funds advised by Pershing Square Capital Management, L.P. (“Pershing Square”). Pershing Square has agreed to (i) exercise its pro rata subscription Right with respect to the Rights Offering and (ii) purchase from the Company, subject to the terms and conditions thereof, at the Rights Offering subscription price of $25.00 per share, any shares of the Company’s common stock not purchased upon the expiration of the Rights Offering, up to $175.0 million in the aggregate, such that the aggregate gross proceeds to the Company of the Rights Offering would be $175.0 million.

The Rights Offering will expire at 5:00 PM, New York time, on October 10, 2024, unless extend by the Company. Regular way trading in the Rights on NYSE American LLC (“NYSE American”) will begin on September 24, 2024 under the symbol “SEG RT” and continue until the close of trading on NYSE American on October 9, 2024 (or, if the offer is extended, on the business day immediately prior to the extended expiration date). The Company reserves the right to amend or terminate the Rights Offering at any time prior to its expiration date.

The shares of common stock to be issued upon exercise of the rights, like the Company's existing shares of common stock, will be listed for trading on the NYSE American under the symbol “SEG.”

The Company expects that the information agent for the Rights Offering will mail subscription rights certificates and a copy of the prospectus for the Rights Offering to stockholders as of the Record Date beginning on or about September 24, 2024. Holders of shares of common stock in “street name” through a brokerage account, bank or other nominee will not receive physical subscription rights certificates and must instruct their broker, bank or nominee whether to exercise subscription rights on their behalf. For any questions or further information about the Rights Offering, please call Georgeson LLC, the information agent for the rights offering, at (866) 410-6525.

Neither the Company nor its Board of Directors has, or will, make any recommendation to stockholders regarding the exercise or sale of Rights in the Rights Offering. Stockholders should make an independent investment decision about whether or not to exercise or sell their Rights based on their own assessment of the Company’s business and the Rights Offering.

The Company expects to use the proceeds from the Rights Offering for general operating, working capital and other corporate purposes.

The Rights Offering is being made pursuant to the Company’s registration statement (including a prospectus) on Form S-1 that was filed with the Securities and Exchange Commission (the “SEC”) and declared effective on September 18, 2024, and a prospectus filed with the SEC on the date hereof. This press release shall not constitute an offer to sell or a solicitation of an offer to buy any of the Rights, the Company’s common stock or any other securities, nor shall there be any offer, solicitation or sale of the Rights, the Company’s common stock or any other securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful under the securities laws of such state or jurisdiction. The Rights Offering will be made only by means of a prospectus. Copies of the prospectus, when it becomes available, will be distributed to all eligible stockholders as of the Record Date and may also be obtained free of charge at the website maintained by the SEC at www.sec.gov, by contacting Wells Fargo Securities, 90 South 7th Street, 5th Floor, Minneapolis, MN 55402, at 800-645-3751 (option #5) or email a request to WFScustomerservice@wellsfargo.com, or by contacting the information agent for the Rights Offering.

Wells Fargo Securities is acting as dealer manager in connection with the Rights Offering.

About Seaport Entertainment Group (NYSE American: SEG)

Seaport Entertainment Group (NYSE American: SEG) is a premier entertainment and hospitality company formed to own, operate, and develop a unique collection of assets positioned at the intersection of entertainment and real estate. Seaport Entertainment Group’s focus is to deliver unparalleled experiences through a combination of restaurant, entertainment, sports, retail and hospitality offerings integrated into one-of-a-kind real estate that redefine entertainment and hospitality.

Safe Harbor and Forward-Looking Statements

This press release includes forward-looking statements within the meaning of the federal securities laws. Such forward-looking statements include, but are not limited to, statements concerning the Company’s plans, goals, objectives, outlook, expectations, and intentions, including with respect to the Rights Offering and the concurrent private placement, including the size, timing, price, anticipated proceeds therefrom and the use of such proceeds. Forward-looking statements are based on the Company’s current expectations and involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied in such forward-looking statements. Factors that could cause the Company’s results to differ materially from current expectations include, but are not limited to: risks related to macroeconomic conditions; changes in discretionary consumer spending patterns or consumer tastes or preferences; risks associated with the Company’s investments in real estate assets and trends in the real estate industry; the Company’s ability to obtain operating and development capital on favorable terms, or at all; the Company’s ability to renew its leases or re-lease available space; the Company’s ability to compete effectively; the Company’s ability to successfully identify, acquire, develop, and manage properties on terms that are favorable to it; the impact of uncertainty around, and disruptions to, the Company’s supply chain; risks related to the concentration of the Company’s properties in Manhattan and the Las Vegas area; extreme weather conditions or climate change that may cause property damage or interrupt business; the impact of water and electricity shortages on the Company’s business; the contamination of the Company’s properties by hazardous or toxic substances; catastrophic events or geopolitical conditions that may disrupt the Company’s business; actual or threatened terrorist activity and other acts of violence, or the perception of a heightened threat of such events; risks related to the disruption or failure of information technology networks and related systems; the Company’s ability to attract and retain key personnel; the Company’s inability to control certain properties due to the joint ownership of such property; the significant influence Pershing Square has over the Company; the ability to realize the anticipated benefits of the Rights Offering, the financial and operating performance of the Company following the Rights Offering; and the other factors detailed in the Company’s Registration Statement filed on Form S-1 (Registration No. 333-279690), and related prospectus, as well as other risks discussed in the Company’s filings with the SEC from time to time. The forward-looking statements contained in this press release speak only as of the date hereof. The Company disclaims any duty to update the information herein, except as required by law.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240923095944/en/

Investor Relations:

Seaport Entertainment Group, Inc.

T: (212) 732-8257

ir@seaportentertainment.com



Media Relations:

The Door

theseaport@thedooronline.com

Source: Seaport Entertainment Group

FAQ

What is the subscription price for Seaport Entertainment Group's (SEG) rights offering?

The subscription price for Seaport Entertainment Group's (SEG) rights offering is $25.00 per share.

When does the rights offering for Seaport Entertainment Group (SEG) expire?

The rights offering for Seaport Entertainment Group (SEG) is set to expire at 5:00 PM, New York time, on October 10, 2024, unless extended by the company.

How many shares of Seaport Entertainment Group (SEG) can be purchased with each right?

Each right in the Seaport Entertainment Group (SEG) offering entitles the holder to purchase 1.267683 shares of common stock.

What is the total value of Seaport Entertainment Group's (SEG) rights offering?

Seaport Entertainment Group's (SEG) rights offering has a total value of $175.0 million.