Redeemable Series A Convertible Preferred Stock

9 Months Ended

Sep. 30, 2020

Schedule of Investments [Abstract]

Redeemable Series A Convertible Preferred Stock

Redeemable Series A Convertible Preferred Stock

On May 19, 2020, we issued 250,000 shares of our 7.50% Series A Convertible Preferred Stock (the “Series A Preferred Stock”), with a par value of $0.01 per share, for an aggregate purchase price of $250 million, or $1,000 per share, pursuant to an Investment Agreement (the “Investment Agreement”) with CD&R VFC Holdings, L.P. (the “Purchaser”), an affiliate of Clayton, Dubilier & Rice, LLC, (“CD&R”) dated April 30, 2020. We received net proceeds of $244 million after issuance costs, a portion of which was used to pay down our revolver borrowings and the remainder of which was used to provide additional short-term liquidity and support general corporate purposes.

Our right to elect a conversion was triggered on September 4, 2020, when the closing share price of our common stock was $22.29 , which marked the twentieth trading day in a period of thirty consecutive trading days that our volume weighted average stock price closed above $22.20 (which is equal to 200% of the conversion price for the Series A Preferred Stock of $11.10 currently in effect). On September 9, 2020, we then converted a portion of our 7.50% Series A Convertible Preferred Stock to 14.4 million shares of Common Stock in accordance with the terms of the Investment Agreement. Following this conversion, the Purchaser continues to own 90,632 shares of Series A Preferred Stock. The remaining Series A Preferred Stock is a participating security for our calculation of earnings per share (see Note 15 - Earnings (Loss) Per Share). To convert the remaining shares of Series A Preferred Stock into Common Stock, we require shareholder consent to comply with NASDAQ Listing Rules that otherwise limit Common Stock ownership to less than 20%. On November 17, 2020, we are scheduled to hold a Special Meeting of Shareholders to vote on the conversion of the remaining outstanding Series A Preferred Stock into common stock.

For the three months ended September 30, 2020, our board of directors declared a pro rata quarterly dividend. For the three and nine months ended September 30, 2020 we paid preferred dividends of $4 million and $6 million, respectively. There were no cumulative dividends included in the accompanying condensed consolidated financial statements in connection with the outstanding shares of Series A Preferred Stock.

Under the terms of the Investment Agreement, the Purchaser had the right to appoint two designees to our board of directors (see Note 16 - Related Party Transactions).