INNOVATE Corp. Sells 75% Stake in Broadcasting to CONX CORP. and Completes $105 Million Refinancing 1

INNOVATE Corp. Announces Major Broadcasting Refinancing and Sale to CONX CORP.

Key Developments in Broadcasting Segment with Potential Impact on Shareholder Value

Summary of Key Points

INNOVATE Corp. (NYSE: VATE) has completed a significant refinancing transaction for its broadcasting division and entered into a definitive agreement to sell a controlling interest in its Broadcasting business to CONX CORP.
After the transaction closes, CONX CORP. will own approximately 75% of Broadcasting, while INNOVATE will retain around 25% through HC2 Holdco.
The transaction is subject to standard closing conditions, including regulatory approvals (notably the FCC).
INNOVATE’s Broadcasting segment is the largest operator of Class A and LPTV licenses in the U.S., with 260 TV stations and more than 50 broadcast networks across 40 states.
A new \$105 million loan was secured and used to refinance previous high-yield notes, fund equity repurchases, and cover transaction costs. This loan will be extinguished upon closing the merger.
CONX will provide up to \$75 million in new equity funding post-closing, subject to adjustments and obligations.
INNOVATE will have an option to buy back up to 15% additional ownership in Broadcasting from CONX for 18 months post-closing.
A CONX affiliate has a two-year option to acquire up to 80.1% of Broadcasting, potentially further reducing INNOVATE’s stake.
Transaction approved by both companies’ Boards of Directors.

Detailed Report

INNOVATE Corp. announced today a series of transformative steps for its Broadcasting segment.
The company’s subsidiary, HC2 Broadcasting Holdings Inc. (“Broadcasting”), has successfully closed a \$105 million refinancing transaction and entered into a definitive agreement to sell a controlling interest in Broadcasting to CONX CORP. (“CONX”). These actions mark a significant milestone in INNOVATE’s ongoing efforts to improve its capital structure and sharpen its strategic focus.

Following the completion of this transaction—contingent on regulatory and customary approvals—CONX will hold approximately 75% of Broadcasting, with INNOVATE retaining roughly 25% ownership through HC2 Holdco. The transaction also positions INNOVATE to address its balance sheet and liquidity needs, which are central to investor concerns.

Broadcasting Portfolio and Strategic Rationale

Since 2017, INNOVATE’s Broadcasting division has acquired and built 260 over-the-air television stations, making it the nation’s largest Class A and LPTV license holder. The segment distributes over 50 broadcast networks in 40+ states, reflecting a robust and diversified broadcasting footprint. The transaction is expected to provide Broadcasting with operational stability and access to additional capital, while allowing INNOVATE to participate in potential future growth through its retained stake.

Refinancing Details

Broadcasting entered into a \$105 million loan agreement with HC2 Merger Sub, LLC, a CONX subsidiary. The proceeds were used to:

Fully repay existing 8.50% and 11.45% notes,
Fund repurchases of equity interests from Broadcasting’s noteholders,
Cover related transaction costs.

Importantly, the new loan and accrued interest will be extinguished as part of the merger consideration and will not require cash repayment upon closing. The loan matures on May 29, 2027, but may be accelerated under certain conditions.

Merger and Equity Commitment

Under the merger agreement, HC2 Merger Sub will merge with Broadcasting (which survives). CONX will inject up to \$75 million in new equity post-closing, subject to adjustment and indemnification obligations. This funding is expected to support Broadcasting’s ongoing operations and expansion plans.

INNOVATE will have the right for 18 months post-closing to repurchase up to 15% additional ownership from CONX, potentially increasing its stake and upside in the Broadcasting business if conditions are favorable.

Additionally, a CONX-affiliated entity has an option for two years to acquire up to 80.1% of Broadcasting on a fully-diluted basis. If exercised, this could further dilute INNOVATE’s ownership but would provide additional liquidity or value realization for INNOVATE shareholders.

Board Approvals and Advisors

The Boards of INNOVATE and CONX have both approved the transaction. Legal and financial advice was provided by Cleary Gottlieb Steen & Hamilton LLP and Dundon Advisers LLC, respectively.

Potential Impact for Shareholders

Balance Sheet Improvement: The refinancing and sale are expected to materially improve INNOVATE’s capital structure, reduce debt, and enhance future flexibility—all of which are likely to be viewed positively by investors and could support share price appreciation.
Retained Upside: INNOVATE’s retained stake and option to increase ownership provide ongoing participation in Broadcasting’s growth, while the CONX affiliate option offers a clear path to further liquidity events.
Regulatory Risk: The transaction is subject to FCC and other regulatory approvals, and there are risks related to timing, conditions, or potential non-completion, which could impact the share price if not met.
Significant Capital Infusion: The \$75 million equity commitment and new strategic partnership with CONX position Broadcasting for continued investment and competitive strength in the evolving broadcasting and ATSC 3.0/5G ecosystem.

Forward-Looking Statements

This announcement contains forward-looking statements regarding the anticipated merger, refinancing, ownership structure, equity investments, and business prospects of Broadcasting. These statements are subject to risks and uncertainties, including the possibility that the transaction may not close as expected, regulatory delays, and potential macroeconomic or industry headwinds. Shareholders should review the company’s filings with the SEC for a full discussion of risk factors.

Contact for Investors

For further information, investors can contact Solebury Strategic Communications, Anthony Rozmus, at (212) 235-2691 or via email at [email protected].

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own due diligence and consult with financial advisors before making investment decisions. The article reflects the information available as of the publication date and is not updated for subsequent developments.