Sec Form 13D Filing - Providence Equity Partners VIII-A L.P. filing for OUTFRONT MEDIA INC (OUT) - 2020-04-27

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CUSIP No. 69007J106

SCHEDULE 13D

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CUSIP No. 69007J106

SCHEDULE 13D

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CUSIP No. 69007J106

SCHEDULE 13D

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CUSIP No. 69007J106

SCHEDULE 13D

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CUSIP No. 69007J106

SCHEDULE 13D

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CUSIP No. 69007J106

SCHEDULE 13D

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As a result of the purchase by the PEP Direct Holders of the shares of Series A Preferred Stock (as defined in Item 3), the Reporting Persons may be deemed to be a “group” within the meaning of Section 13(d)(3) of the Act, and may deemed to be the beneficial owner of all of the shares of Common Stock issuable upon conversion of the shares of Preferred Stock owned by each of the PEP Direct Holders. However, neither the fact of this filing nor anything contained herein shall be deemed to be an admission by the Reporting Persons that such a group exists.

CUSIP No. 69007J106

SCHEDULE 13D

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 (a) — (b) The ownership percentages set forth below are calculated, with respect to each Reporting Person, as a percentage of the sum of (A) and (B) where (A) is equal to144,353,374 shares of Common Stock outstanding as of April 9, 2020, as set forth in the Issuer’s Proxy Statement on Schedule 14-A, filed with the Commission on April 24, 2020 and (B) is equal to the number of shares of Common Stock that are issuable, as of the Issuance Date, assuming that all of the shares of Series A Preferred Stock directly held or which may be deemed to be beneficially owned by such Reporting Person were converted into shares of Common Stock of the Issuer on the Issuance Date. The number of shares of Common Stock that are issuable upon the conversion of shares of Series A Preferred Stock is calculated based on an initial conversion rate of 62.50 shares of Common Stock for each share of Series A Preferred Stock, subject to certain adjustments.

 

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Articles Supplementary

On the Issuance Date, the Issuer filed with the State Department of Assessments and Taxation of Maryland Articles Supplementary classifying the Series A Preferred Stock (the “Articles Supplementary”), effective as of the Issuance Date, establishing the rights and preferences of the Series A Preferred Stock, including (among others) the following:

The Series A Preferred Stock ranks senior to the Common Stock with respect to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Issuer. Each share of Series A Preferred Stock has an initial liquidation preference of $1,000 per share.

Holders of the Series A Preferred Stock are entitled to a cumulative dividend accruing at the initial rate of 7.0% per year, payable quarterly in arrears. The dividend rate will increase by an additional 0.75% per annum effective on each anniversary of the Issuance Date beginning on and following the eighth anniversary of the Issuance Date. The dividend rate is subject to increases during certain other circumstances as set forth in the Articles Supplementary, including an increase by up to 2.00% per year during periods in which the Issuer fails to make certain dividend payments or fails to pay certain amounts due in respect of the Series A Preferred Stock. Dividends may, at the option of the Issuer, be paid in cash, in-kind, through the issuance of additional shares of Series A Preferred Stock or a combination of cash and in-kind, until the eighth anniversary of the Issuance Date, after which time dividends will be payable solely in cash.

CUSIP No. 69007J106

SCHEDULE 13D

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So long as any shares of Series A Preferred Stock remain outstanding, the Issuer may not declare a dividend on, or make any distributions relating to, capital stock that ranks junior to, or on a parity basis with, the Series A Preferred Stock, subject to certain exceptions, including but not limited to (i) any dividend or distribution in cash or capital stock of the Issuer on or in respect of the capital stock of the Issuer to the extent that such dividend or distribution is necessary to maintain the Issuer’s status as a real estate investment trust (a “REIT”) unde r the Internal Revenue Code of 1986, as amended, and (ii) any dividend or distribution in cash in respect of Common Stock that, together with the dividends or distributions during the 12-month period immediately preceding such dividend or distribution, is not in excess of 5% of the aggregate dividends or distributions paid by the Issuer necessary to maintain its REIT status during such 12-month period. Following the one-year anniversary of the Issuance Date, if all or any portion of the dividends or distributions is paid in respect of the shares of Common Stock in cash, then concurrently and as a condition to such payment, the shares of Series A Preferred Stock will participate in such dividends or distributions on an as-converted basis up to the amount of their accrued dividend on the Series A Preferred Stock for such quarter, which amounts will reduce the dividends payable on the shares of Series A Preferred Stock dollar-for-dollar for such quarter.

The Series A Preferred Stock is convertible at the option of any holder at any time into shares of Common Stock at an initial conversion price of $16.00 per share and an initial conversion rate of 62.50 shares of Common Stock per share of Series A Preferred Stock, subject to certain anti-dilution adjustments.

At any time from and after the third anniversary of the Issuance Date, if (i) the volume-weighted average price of the Common Stock exceeds 150% of the then-applicable conversion price for at least 20 trading days in any period of 30 trading days and (ii) (A) the Issuer has an effective Resale Shelf Registration Statement (as defined in the Registration Rights Agreement (as defined below)) on file with the Commission or (B) the shares of Common Stock to be issued on mandatory conversion would be eligible to be offered, sold or otherwise transferred by the holder thereof pursuant to Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”), without any requirements as to volume, manner of sale or availability of current public information (whether or not then satisfied), all of the Series A Preferred Stock may be converted, at the election of the Issuer, into the relevant number of shares of Common Stock, plus cash in lieu of any fractional shares. In addition, the Issuer may redeem any or all of the Series A Preferred Stock for cash at any time after the seventh anniversary of the Issuance Date at a redemption price equal to 100% of the liquidation preference of the Series A Preferred Stock, plus any accrued and unpaid dividends as of the applicable redemption date.

Upon the occurrence of a Change of Control (as defined in the Articles Supplementary), each holder of the Series A Preferred Stock can either (i) require the Issuer to purchase any or all of their shares of Series A Preferred Stock (a “Change of Control Put”) at a redemption price payable in cash equal to 105% of the liquidation preference of the Series A Preferred Stock, plus any accrued and unpaid dividends as of the applicable purchase date, or (ii) convert any or all of their shares of Series A Preferred Stock (a “Change of Control Conversion”) into the number of shares of Common Stock equal to the liquidation preference (including accrued and unpaid dividends as of the conversion date) divided by the then-applicable conversion price, plus cash in lieu of any fractional shares. Upon the occurrence of a Change of Control, any shares of Series A Preferred Stock as to which a Change of Control Put or Change of Control Conversion was not exercised may be redeemed in cash, at the option of the Issuer, at a redemption price equal to 100% of the liquidation preference plus accrued and unpaid dividends as of the applicable redemption date.

CUSIP No. 69007J106

SCHEDULE 13D

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The issuance of shares of Common Stock upon the conversion of Series A Preferred Stock is subject to a cap equal to 28,856,239 shares of Common Stock (the “Share Cap”) unless and until the Issuer obtains stockholder approval (to the extent required under the New York Stock Exchange listing rules) for the issuance of additional shares (“Stockholder Approval”). If the Share Cap would be exceeded in connection with the issuance of shares upon a conversion of the Series A Preferred Stock, the Issuer will deliver to holders an amount of cash per share equal to the volume-weighted average price per share of the Common Stock on the trading day immediately preceding the conversion date for each share of Common Stock that holders would have received had they converted such shares of Series A Preferred Stock into Common Stock on the conversion date. Additionally, the issuance of additional shares of Series A Preferred Stock as an in-kind dividend is subject to the Share Cap, and if any in-kind dividends of Series A Preferred Stock would cause the total number of shares of Common Stock into which the Series A Preferred Stock is convertible to exceed the Share Cap, such dividend shall instead be paid in cash, unless and until the Issuer obtains Stockholder Approval.

The Articles Supplementary provide that holders of the Series A Preferred Stock shall have the right to vote on matters submitted to a vote of the holders of Common Stock (voting together as one class) on an as-converted basis, except as otherwise prohibited by applicable law or by the terms of the Articles Supplementary, provided that the holders of the Series A Preferred Stock affiliated with the PEP Direct Holders will not be entitled to voting rights in the election of directors of the Issuer until the expiration or termination of its applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and, if applicable, the Canadian Competition Act. In no event will the holders of the Series A Preferred Stock have the right to vote shares of Series A Preferred Stock on as as-converted basis in excess of the Share Cap.

Certain matters will require the approval of the holders of at least a majority of the shares of Series A Preferred Stock outstanding at such time, voting together as a separate class, including, among others, (i) the authorization, issuance or reclassification of, or any amendments to the Issuer’s Charter and the Issuer’s Amended and Restated Bylaws to authorize, create or increase the issued shares of, any class or series of senior or parity equity securities or any security convertible into, or exchangeable or exercisable for, shares of senior or parity equity securities, (ii) the redemption, repurchase or other acquisition of junior equity securities by the Issuer (other than certain exceptions, such as repurchases of equity securities in connection with the Issuer’s equity compensation plans or existing DownREIT arrangements), (iii) the incurrence of any additional indebtedness by the Issuer or its subsidiaries not otherwise permitted under the Issuer’s indebtedness agreements existing on the Issuance Date, as they may be amended, restated, replaced or refinanced from time to time and (iv) the issuance of any preferred stock or senior securities or securities convertible into preferred stock or senior securities of the Issuer’s subsidiaries (other than to the Issuer or the Issuer’s wholly-owned subsidiaries) in connection with any financing transaction or any capital raising transaction. Additionally, amendments, modifications, supplements, waivers or other changes of any provision of the Issuer’s Charter (including the Articles Supplementary) that adversely alters or changes the rights, powers, preferences or privileges of the holders of the Series A Preferred Stock, shall require the approval of holders of 75% of the outstanding shares of Series A Preferred Stock so long as the Ares Purchasers, together with their affiliates, continue to beneficially own in the aggregate shares of Series A Preferred Stock, Common Stock or shares of Series A Preferred Stock convertible into Common Stock representing (on an as-converted basis) 90% of the number of shares of Common Stock beneficially owned by the Ares Purchasers on the Issuance Date, with a majority of the outstanding shares of Series A Preferred Stock required in all other periods, voting as a separate class.

CUSIP No. 69007J106

SCHEDULE 13D

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Investment Agreement

Pursuant to the Investment Agreement, the Issuer has agreed to increase the size of its board of directors (the “Board”) in order to elect one individual designated by the PEP Direct Holders (the “Providence Designee”) to the Board for a term commencing after the Issuer’s 2020 annual meeting of stockholders on June 8, 2020, and expiring at the Issuer’s 2021 annual meeting of stockholders. At the Issuer’s 2021 annual meeting of stockholders, the Issuer will nominate the Providence Designee for election as a director with a term expiring at the Issuer’s subsequent annual meeting of stockholders. So long as the PEP Direct Holders or their permitted transferees beneficially own shares of Series A Preferred Stock and/or shares of Common Stock issued upon conversion of shares of Series A Preferred Stock that represent, in the aggregate and on an as-converted basis, at least 25% of the shares of Common Stock, on an as-converted basis, beneficially owned by the PEP Direct Holders on the Issuance Date, then the PEP Direct Holders will continue to have the right to designate the Providence Designee and the Issuer will nominate the Providence Designee for election as a director during each applicable annual meeting of stockholders with a term expiring at the Issuer’s subsequent annual meeting of stockholders.

Under the Investment Agreement, with respect to the PEP Direct Holders, so long as the PEP Direct Holders or their permitted transferees beneficially own shares of Series A Preferred Stock and/or shares of Common Stock issued upon conversion of shares of Series A Preferred Stock that represent, in the aggregate and on an as-converted basis, at least 25% of the shares of Common Stock, on an as-converted basis, beneficially owned by the PEP Direct Holders on the Issuance Date (the first day in which such requirement is not satisfied, the “Fall-Away of Rights”), subject to certain exceptions, the Issuer is required to give the PEP Direct Holders notice of any proposed issuance by the Issuer of any shares of Common Stock, and any warrants, options or other rights to acquire, or any securities exercisable for, exchangeable for or convertible into Common Stock or any other class of capital stock of the Issuer, no less than 10 business days prior to the proposed date of issuance. The PEP Direct Holders are then entitled to purchase up to their pro rata share of the securities the Issuer proposes to issue.

The Reporting Persons and their affiliates are subject to certain standstill restrictions, including that they will be restricted from acquiring additional securities of the Issuer, subject to certain exceptions, until, with respect to the Reporting Persons and their affiliates, the later of (A) the first day on which the Providence Designee no longer serves on the Issuer’s Board and the PEP Direct Holders or their permitted transferees have no rights (or have irrevocably waived their rights) to designate a director for election to the Issuer’s Board, and (B) the two year anniversary of the Issuance Date. However, the Reporting Persons and their affiliates may acquire a number of additional shares of Common Stock that does not exceed 3.44% in the aggregate, calculated based on the issued and outstanding shares of Common Stock as of April 16, 2020.

Until the Fall-Away of Rights, the PEP Direct Holders and their permitted assigns shall vote all of the shares of Series A Preferred Stock or Common Stock beneficially owned by such persons in the following manner with respect to only the circumstances set forth therein: (i) in favor of each director nominated and recommended by the Board for election, (ii) against any stockholder nominations for director which are not approved and recommended by the Board, (iii) in favor of the Issuer’s “say on pay” proposal and any proposal by the Issuer relating to equity compensation that has been approved by the Compensation Committee of the Board, and (iv) in favor of the Issuer’s proposal for ratification of the appointment of the Issuer’s independent registered public accounting firm. In addition, until the Fall-Away of Rights, the PEP Direct Holders and their permitted assigns shall be present, in person or by proxy, at all meetings of the stockholders of the Issuer to which the shares of Series A Preferred Stock or Common Stock may be counted for purposes of determining a quorum. As noted above, the holders of the Series A Preferred Stock affiliated with the PEP Direct Holders will not be entitled to voting rights in the election of directors of the Issuer until the expiration or termination of its applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and, if applicable, the Canadian Competition Act.

CUSIP No. 69007J106

SCHEDULE 13D

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Registration Rights Agreement

On the Issuance Date, the Issuer entered into a Registration Rights Agreement (the “Registration Rights Agreement”), by and among the Issuer, PEP VIII-A, PEP Scotland, PEP 5, PEP 6 and the Ares Purchasers, to which PEP Advertising executed a joinder.

The Registration Rights Agreement provides that the Issuer will use its reasonable best efforts to prepare and file a shelf registration statement with the Commission no later than 90 days after the Issuance Date and to use its reasonable best efforts to cause such shelf registration statement to be declared effective as promptly as is reasonably practicable after its filing to permit the public resale of registrable securities (as defined in the Registration Rights Agreement) covered by the Registration Rights Agreement. The registrable securities generally include any shares of Common Stock into which the Series A Preferred Stock is convertible and any other securities issued or issuable with respect to any such shares of Common Stock by way of share split, share dividend, distribution, recapitalization, merger, exchange, replacement or similar event or otherwise.

The Issuer generally will be required to effect up to (i) within any twelve-month period during the term of the Registration Rights Agreement, two underwritten offerings of the registrable securities at the request of the PEP Direct Holders and (ii) in the aggregate during the term of the Registration Rights Agreement, four underwritten offerings of the registrable securities at the request of the PEP Direct Holders, subject to certain limitations, including that the anticipated gross proceeds of any offering be at least $75.0 million. The PEP Direct Holders are also entitled to customary “piggy-back” registration rights. The rights of any particular holder to cause the Issuer to register securities under the Registration Rights Agreement will terminate with respect to that holder upon the date on which such holder no longer holds any Series A Preferred Stock or any registrable securities. The registration rights set forth in the Registration Rights Agreement will terminate on the date on which all shares of Common Stock issuable (or actually issued) upon conversion of the Series A Preferred Stock cease to be registrable securities.

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CUSIP No. 69007J106

SCHEDULE 13D

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SCHEDULE A

 

INFORMATION CONCERNING THE MANAGING MEMBERS OF PEP VIII INTERNATIONAL LTD. AND PEP VIII (SCOTLAND) INTERNATIONAL LTD.

 

The following table sets forth the name, business address, and present principal occupation or employment of each present director and officer of PEP VIII International Ltd. and PEP VIII (Scotland) International Ltd. (the “Schedule A Persons”), and the principal business and address of any corporation or other organization in which such employment is conducted.

 

PEP VIII (Scotland) International Ltd.
	Name		Employer & Business Address		Present Principal Occupation or Employment		Citizenship
	Sarah N. Conde		PEP VIII (Scotland) International Ltd. c/o Providence Equity Partners L.L.C. 50 Kennedy Plaza, 18th Floor Providence, RI 02903		Director of  PEP VIII (Scotland) International Ltd.		United States
	Marc G. Puglia		PEP VIII International Ltd. c/o Providence Equity Partners L.L.C. 50 Kennedy Plaza, 18th Floor Providence, RI 02903		Chief Financial Officer of  PEP VIII International Ltd. and Director of  PEP VIII (Scotland) International Ltd.		United States
	Aaron W. Fine		PEP VIII (Scotland) International Ltd. c/o Providence Equity Partners L.L.C. 50 Kennedy Plaza, 18th Floor Providence, RI 02903		Director of  PEP VIII (Scotland) International Ltd.		United States

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