Reuters, March 30, 2020 article: "Activist investor makes new push for HC2 board to remove chief Falcone: letter" [Activist offers to negotiate with HC2 board for removal of CEO-Chairman Falcone]

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The Shareholder Forum had offered to support Appraised Value Rights ("AVR") of DBM (f/k/a Schuff International) minority shareholders in 2014 following a $31.50 per share tender offer by the company's controlling shareholder, HC2 Holdings, Inc., with the stated intent to proceed with a short-form merger "as soon as practicable.”

HC2 acquired DBM shares in the 2014 tender offer and other purchases bringing its total holdings to 92% of outstanding DBM shares, but has not proceeded with a merger. The Forum has continued to support the minority shareholder interests of its AVR participants in this context.

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Activist offers to negotiate with HC2 board for removal of CEO-Chairman Falcone

For previously cited records of creditor actions against Philip Falcone, HC2's chief executive officer and Chairman of DBM Global's board of directors, which have been subjects of other recent news reports (March 9, 2020 Financial Times: "NY judge freezes hedge fund manager Philip Falcone’s assets" and February 21, 2020 Reuters: "Lawsuit in NY says ex-hedge fund manager Falcone reneged on loans, wrongly sold a Warhol"), see

February 21, 2020, Supreme Court of the State of New York, Melody Business Finance, LLC, vs. Philip A. Falcone, et al (Index No. 651155/2020): Summons and Complaint (35 pages, 433 KB, in PDF format) [for a copy Complaint with exhibits, 617 pages 117 MB, click here]; see also subsequent February 28, 2020 Stipulation and Order (2 pages, 105 KB, in PDF format) granting preliminary injunction prohibiting defendants' removal or disposition of any collateral pledged to Melody
February 12, 2020, Supreme Court of the State of New York, Jet Aviation Flight Services, Inc., vs. Harbinger Capital Partners, LLC (Index No. 650974/2020): Verified Petition to Confirm Arbitration Award (6 pages, 637 KB, in PDF format)
January 24, 2020 (publicly refiled March 5, 2020), Supreme Court of the State of New York, Dontzin Nagy & Fleissig, LLP vs. Philip A. Falcone and Harbinger Capital Partners Offshore Manager, L.L.C. (Index No. 650535/2020): Verified Petition (96 pages, 20 MB, in PDF format); see also subsequent March 4, 2020 Restraining Order (2 pages, 51 KB, in PDF format) prohibiting defendants "from moving, disposing, transferring, encumbering, and/or further encumbering any property or assets of any type in either of their possession, custody, control and/or in which either is, in whole or in part, a beneficial owner"
October 3, 2019, Supreme Court of the State of New York, The City of New York, Petitioner-Judgment Creditor, v. HC2 Holdings, Inc., Respondent-Garnishee (Index No. 451275/2019): Order and Judgment (2 pages, 71 KB, in PDF format); see also August 7, 2019, Supreme Court of the State of New York, The City of New York, Petitioner-Judgment Creditor, v. HC2 Holdings, Inc., Respondent-Garnishee (Index No. 451275/2019): Verified Petition for a judgment pursuant to CPLR § 5227 (27 pages, 2.6 MB, in PDF format)

For MG Capital's previously reported request of an independent board investigation of insurance company transactions, see

March 3, 2020 Reuters: "Activist MG Capital calls for HC2 to investigate insurance deal" [HC2 challenger asks company's current directors to investigate source of management fees]

Note: For the subsequently published letter described in the article below, see March 30, 2020, MG Capital Management, Ltd. (published by Business Wire): "MG Capital Sends Letter to HC2’s Recently-Appointed Lead Director."

Source: Reuters, March 30, 2020 article

BUSINESS NEWS March 30, 2020 / 7:27 AM

Activist investor makes new push for HC2 board to remove chief Falcone: letter

(Reuters) - Hedge fund MG Capital Management Ltd has asked the board of HC2 Holdings Inc (HCHC.N), a holding company for industrial and manufacturing businesses, to investigate the acquisition of a long-term care business it carried out two years ago, according to an MG letter seen by Reuters.

FILE PHOTO: Philip Falcone, chief executive officer and chief investment officer for Harbinger Capital Partners, participates in a panel discussion during the Skybridge Alternatives (SALT) Conference in Las Vegas, Nevada May, 9, 2012. SALT brings together public policy officials, capital allocators, and hedge fund managers to discuss financial markets. REUTERS/Steve Marcus

MG Capital, run by former Third Point executive Michael Gorzynski, said for the second time in two months that it wants Falcone out. Gorzynski asked lead independent director Wayne Barr in a letter seen by Reuters a “to facilitate the removal of Mr. Falcone.”

In February the fund, which owns 5% of HC2 along with its partners, criticized the company’s financial performance and said it wanted to replace the entire board, including Falcone, with six directors of its own.

Now, Gorzynski is focusing more on Falcone, whose bets on the overheated housing market at his Harbinger Capital turned him, briefly, into a billionaire. Last year his net worth was closer to $300 million, he told lawyers.

“Based on Mr. Falcone’s well-documented financial, legal and regulatory issues, MG Capital - and presumably other stockholders - remains perplexed by the incumbent Board’s focus on preserving HC2’s status quo,” MG Capital said in the letter.

HC2 has businesses in construction, marine services and several other sectors. A spokesman for the firm was not immediately available for comment.

An MG spokesman confirmed the content of the letter.

In the last six weeks, Falcone has been sued for more than $65.8 million for allegedly defaulting on loans and had his assets frozen for failing to pay lawyers. Last year HC2 was ordered by a court to withhold some of Falcone’s wages to satisfy unpaid obligations after he was ordered to pay New York City $2.69 million in unpaid taxes.

“We remain deeply troubled by the impact that Mr. Falcone’s apparent financial distress and legal issues may have on HC2,” MG Capital said.

In papers filed Feb. 21 with the New York State Supreme Court in Manhattan, Melody Business Finance LLC said Falcone and affiliates reneged on obligations to repay loans, which date from 2013 to 2017, and improperly sold some of the underlying collateral, including an Andy Warhol painting.

Alex Spiro, a partner at Quinn Emanuel Urquhart & Sullivan representing Falcone, said in an statement: “This is a personal dispute without merit. We will fight this.”

In early March, Justice Arthur Engoron froze Falcone’s assets after he failed to pay $13.6 million to law firm Dontzin Nagy & Fleissig.

The firm represented Falcone in 2013 when he settled allegations with the Securities and Exchange Commission that he borrowed $113 million from his hedge fund to pay personal taxes and gave preferential treatment to certain clients when he halted redemptions.

Gorzynski in the letter to Barr said MG would “engage in a constructive one-to-one dialogue with you and the other directors once Mr. Falcone has been removed.”

Reporting by Svea Herbst-Bayliss; Editing by Christopher Cushing

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