Goldman Sachs is making an equity investment of $95 million in MDC Partners through convertible preference shares. Upon completion of the transaction, Goldman Sachs will own around 15% of the outstanding equity of MDC Partners.
After the deal closes—expected by March 31--Bradley J. Gross, a managing director in the Merchant Banking Division of Goldman Sachs, will join the MDC Partners Board of Directors, which will expand to seven members.
Investors reacted with enthusiasm, driving MDC's stock price up 33% during early trading hours to $8.85.
“This investment affirms the value of our world-class agency portfolio,” stated MDC chairman/CEO Scott Kauffman.
The network said it expects to use the net proceeds to pay down existing debt under the Company's credit facility and for general corporate purposes.
"Brad and his team bring an exceptional track record and important expertise to our continued pursuit of maximizing long-term shareholder value," added Kauffman.
It’s a tumultuous couple of years for the holding company, which has been rocked by an accounting scandal that led to the departure of former CEO Miles Nadal. The company recently finalized an agreement with the SEC to settle one part of the commission’s ongoing probe. Under the terms of that agreement the firm agreed to pay a fine of $1.5 million.
Last year, MDC retained LionTree Advisors to conduct a comprehensive review of the Company's financial and capital structure, which is now concluded. Options are said to have included an outright sale of the company. LionTree and JPMorgan acted as financial advisors to the Company on this transaction.