HC2 sells its stake in Hauwei Marine Networks
HC2 Holdings (HC2) has announced that its marine services division, Global Marine Group (GMG) has agreed a sale of its stake in Huawei Marine Networks.
HC2 currently holds 49% of the joint venture with Huawei Technologies and will sell to Hengtong Optic-Electric Co (Hengtong) for approximately $140 million, based on Huawei Marine Networks’ total value of $285 million.
“We are very pleased at the outcome of the joint venture sales process,” said Philip Falcone (pictured), chairman, president and chief executive officer of HC2. “We want to thank our partners at Huawei, with whom we have had a great working relationship since our acquisition of GMG five years ago, for successfully growing the joint venture and completing over 98 projects globally since inception. Inking this deal now further sets the stage for a potential sale of GMG, including the main operating subsidiary, Global Marine Systems Limited, which continues to be a top priority for us as we close out 2019.”
Under the terms of the agreement, GMG will sell 30% of Huawei Marine Networks to Hengtong at closing, while retaining a 19% under a two-year put option agreement at the larger of the same equity value ($285mm) or fair market value.
In addition, Hengtong is also acquring Huawei’s full 51% stake and will own 81% of the joint venture once both sales have been completed and 100% once GMG’s put option has been finalised.
The sale is due to complete in the first quarter of 2020, subject to the usual closing conditions. Once any outstanding obligations have been met, HC2’s share of the net proceeds from the sale will be used to reduce HC2 debt.
The news follows the reports made in June that Huawei was planning on selling its subsea cable business after a buyer’s filing was made to the Shanghai Stock Exchange showing that Hengtong Optic-Electric Co had signed a letter of intent with Huawei Technologies to buy its 51% stake in Huawei Marine Systems.