Seaport Entertainment Group Announces Rights Offering for Common Stock

Rhea-AI Summary

Seaport Entertainment Group (NYSE American: SEG) has announced a $175 million rights offering to purchase up to 7,000,000 shares of its common stock. Stockholders as of the September 20, 2024 record date will receive transferable subscription rights to purchase shares at $25.00 per share. The offering is expected to expire on October 10, 2024.

The rights offering includes over-subscription privileges for stockholders who exercise their full basic subscription rights. Pershing Square Capital Management has agreed to backstop the offering, ensuring the full $175 million is raised. SEG plans to use the proceeds for general operating, working capital, and other corporate purposes.

Trading of the rights on NYSE American is expected to begin on a 'when-issued' basis on September 19, 2024, under the symbol 'SEG RTWI', and on a 'regular way' basis on September 24, 2024, under 'SEG RT'.

Positive

• Raising $175 million in capital through rights offering
• Backstop agreement with Pershing Square ensures full funding
• Provides existing shareholders opportunity to maintain ownership percentage
• Rights will be tradable on NYSE American

Negative

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

Insights

Financial Analyst

This rights offering is a significant capital raise for Seaport Entertainment Group, aiming to secure $175 million in fresh capital. The pricing at $25 per share represents a strategic decision to balance fundraising goals with shareholder interests. The backstop agreement with Pershing Square Capital Management adds a layer of financial security to the offering, ensuring its success.

The use of proceeds for "general operating, working capital and other corporate purposes" suggests the company may be seeking financial flexibility or preparing for potential growth initiatives. However, the lack of specific allocation plans raises questions about the immediate necessity and strategic direction of this capital infusion.

Investors should closely monitor how this additional capital impacts SEG's financial position and future growth prospects, particularly in the competitive entertainment and hospitality sector.

Market Research Analyst

The rights offering structure demonstrates SEG's attempt to balance existing shareholder interests with the need for capital. By offering pro-rata rights and over-subscription privileges, the company is providing current investors the opportunity to maintain their ownership stake, which could be viewed positively by the market.

However, the timing of this offering, set for September 2024, raises questions about the company's current financial health and market conditions. Investors should analyze SEG's recent performance and industry trends to understand the necessity and potential impact of this capital raise.

The involvement of Pershing Square as a backstop investor adds credibility to the offering but also suggests potential strategic shifts or activist influence in the company's future direction. This could lead to significant changes in SEG's business model or corporate governance, which investors should carefully consider.

NEW YORK--(BUSINESS WIRE)-- Seaport Entertainment Group Inc. (NYSE American: SEG) (the “Seaport Entertainment Group” or “Company”) announced today that its Board of Directors (the “Board”) has approved a plan to proceed with and fixed a record date for a $175.0 million rights offering (the “Rights Offering”) to purchase up to 7,000,000 shares of its common stock.

The Rights Offering will give Company stockholders as of the record date 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. Company stockholders who exercise their respective full basic subscription rights will have over-subscription privileges 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 will distribute to each holder of the Company’s common stock as of 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 a number of new shares of common stock equal to 7,000,000 divided by the number of shares of common stock outstanding on the record date. Trading in the Rights on NYSE American LLC (“NYSE American”) is expected to begin on a “when-issued” basis on September 19, 2024 under the symbol “SEG RTWI”. Trading in the Rights on NYSE American is expected to begin on a “regular way” basis 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 Rights Offering is currently expected to commence promptly after the Record Date and expire at 5:00 P.M., Eastern Time, on October 10, 2024, unless extended by the Company.

The Rights Offering will be backstopped by Pershing Square Capital Management, L.P., through investment funds advised by it (“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 Company expects to use the proceeds from the Rights Offering for general operating, working capital and other corporate purposes.

A registration statement (including a prospectus) on Form S-1 relating to the Rights Offering has been filed with the Securities and Exchange Commission (the “SEC”) but has not yet become effective. There may be no sale of the Rights or the Company’s common stock, nor may offers to buy be accepted, prior to the time the registration statement becomes effective. 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, LLC, 375 Park Avenue, New York, New York 10152, Attn: Equity Syndicate Department, telephone: (800) 326-5897, or by contacting the information agent for the Rights Offering.

Wells Fargo Securities, LLC will be 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 proposed 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/20240906711657/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 Inc.

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 is the record date for Seaport Entertainment Group's (SEG) rights offering?

The record date for Seaport Entertainment Group's (SEG) rights offering is September 20, 2024.

How much capital is Seaport Entertainment Group (SEG) aiming to raise through the rights offering?

Seaport Entertainment Group (SEG) is aiming to raise $175 million through the rights offering.

When does Seaport Entertainment Group's (SEG) rights offering expire?

Seaport Entertainment Group's (SEG) rights offering is expected to expire on October 10, 2024, at 5:00 P.M. Eastern Time, unless extended by the company.

Who is backstopping Seaport Entertainment Group's (SEG) rights offering?

Pershing Square Capital Management, L.P., through investment funds advised by it, is backstopping Seaport Entertainment Group's (SEG) rights offering.