sah20201005_sc13da.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. 2)
MDC PARTNERS INC.
(Name of Issuer)
Class A Subordinate Voting Shares
(Title of Class of Securities)
552697104
(CUSIP Number)
Stagwell Agency Holdings LLC
c/o The Stagwell Group LLC
1808 Eye Street, NW, Sixth Floor
Washington, DC 20006
Attention: Mark J. Penn
(917) 765-2638
(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)
October 4, 2020
(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§ 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box: ☐
Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).
SCHEDULE 13D/A
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CUSIP No. 552697104
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Page 2 of 8 Pages
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1
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NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY).
Stagwell Agency Holdings LLC
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2
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) ☐
(b) ☒
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3
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SEC USE ONLY
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4
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SOURCE OF FUNDS (SEE INSTRUCTIONS)
OO (See Item 3)
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5
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CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
☐
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6
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CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON WITH
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7
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SOLE VOTING POWER
14,348,689 (See Items 4 and 5)*
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8
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SHARED VOTING POWER
0
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9
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SOLE DISPOSITIVE POWER
14,348,689 (See Items 4 and 5)*
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10
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SHARED DISPOSITIVE POWER
0
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11
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
14,348,689 (See Items 4 and 5)*
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12
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
See Item 5.
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13
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
19.7% (See Item 5)**
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14
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TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
OO
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*Reflects the maximum number of Class A Shares of the Issuer issuable upon conversion of the 50,000 Preference Shares beneficially owned by the Reporting Person that are currently eligible for conversion. The Preference Shares are convertible as described in the Schedule 13D.
**The calculation is based on the 14,285,714 Class A Shares of the Issuer beneficially owned by the Reporting Person plus the maximum number of Class A Shares issuable upon conversion of the 50,000 Preference Shares beneficially owned by the Reporting Person that are currently eligible for conversion.
SCHEDULE 13D/A
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CUSIP No. 552697104
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Page 3 of 8 Pages
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1
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NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY).
The Stagwell Group LLC
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2
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) ☐
(b) ☒
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3
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SEC USE ONLY
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4
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SOURCE OF FUNDS (SEE INSTRUCTIONS)
OO (See Item 3)
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5
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CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
☐
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6
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CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON WITH
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7
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SOLE VOTING POWER
14,463,689 (See Items 4 and 5)*
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8
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SHARED VOTING POWER
0
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9
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SOLE DISPOSITIVE POWER
14,463,689 (See Items 4 and 5)*
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10
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SHARED DISPOSITIVE POWER
0
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11
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
14,463,689 (See Items 4 and 5)*
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12
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
See Item 5.
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13
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
19.9% (See Item 5)**
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14
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TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
OO
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* Reflects the maximum number of Class A Shares of the Issuer issuable upon conversion of the 50,000 Preference Shares beneficially owned by the Reporting Person that are currently eligible for conversion. The Preference Shares are convertible as described in the Schedule 13D.
**The calculation is based on the 14,400,714 Class A Shares of the Issuer beneficially owned by the Reporting Person plus the maximum number of Class A Shares issuable upon conversion of the 50,000 Preference Shares beneficially owned by the Reporting Person that are currently eligible for conversion.
SCHEDULE 13D/A
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CUSIP No. 552697104
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Page 4 of 8 Pages
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1
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NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY).
Mark J. Penn
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2
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) ☐
(b) ☒
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3
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SEC USE ONLY
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4
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SOURCE OF FUNDS (SEE INSTRUCTIONS)
OO (See Item 3)
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5
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CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
☐
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6
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CITIZENSHIP OR PLACE OF ORGANIZATION
United States
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NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON WITH
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7
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SOLE VOTING POWER
14,488,689 (See Items 4 and 5)*
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8
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SHARED VOTING POWER
0
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9
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SOLE DISPOSITIVE POWER
14,488,689 (See Items 4 and 5)*
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10
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SHARED DISPOSITIVE POWER
0
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11
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
14,488,689 (See Items 4 and 5)*
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12
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
See Item 5.
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13
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
19.9% (See Item 5)**
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14
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TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
IN
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* Reflects the maximum number of Class A Shares of the Issuer issuable upon conversion of the 50,000 Preference Shares beneficially owned by the Reporting Person that are currently eligible for conversion. The Preference Shares are convertible as described in the Schedule 13D.
**The calculation is based on the 14,425,714 Class A Shares of the Issuer beneficially owned by the Reporting Person plus the maximum number of Class A Shares issuable upon conversion of the 50,000 Preference Shares beneficially owned by the Reporting Person that are currently eligible for conversion.
This Amendment No. 2 to Schedule 13D (this “Amendment No. 2”) is being filed jointly by: (i) Stagwell Agency Holdings LLC, a Delaware limited liability company (“SAH”), (ii) The Stagwell Group LLC, a Delaware limited liability company, and (iii) Mark J. Penn, a United States citizen (collectively, the “Reporting Persons” and each, individually, a “Reporting Person”), and amends the original statement on Schedule 13D filed jointly by the Reporting Persons with the Securities and Exchange Commission on March 14, 2019, as amended by Amendment No. 1 on June 26, 2020 (the “Schedule 13D”), with respect to the Class A Subordinate Voting Shares of MDC Partners Inc.
This Amendment No. 2 amends the Schedule 13D as set forth herein. Unless otherwise indicated herein, each capitalized term used but not otherwise defined herein shall have the meaning given to such term in the Schedule 13D.
Item 4. Purpose of Transaction.
Item 4 of the Schedule 13D is hereby amended and supplemented by adding the following:
Following delivery of the Proposal Letter by Stagwell Media to the Board of the Issuer on June 25, 2020, the Reporting Persons and a special committee of the Board (the “Special Committee”) engaged in discussions concerning the transaction contemplated by the Proposal Letter (the “Proposed Transaction”), including with respect to the share consideration and transaction structure. In connection with these discussions, the Reporting Persons and the Special Committee have reached a preliminary, non-binding agreement in principle that (i) the pre-transaction holders of the Issuer’s common shares (without giving effect to any conversion of outstanding Preference Shares) would own 26% of the combined company on a pro forma basis immediately following consummation of the Proposed Transaction, and (ii) the Proposed Transaction would be effected through an “Up-C” structure, pursuant to which the Issuer would contribute all of its subsidiaries and other assets and certain liabilities to a subsidiary wholly-owned by the Issuer (“OpCo”) and Stagwell Media would immediately thereafter contribute a holding company that holds the in-scope businesses of Stagwell Media to OpCo in exchange for newly issued units of OpCo and an equal number of shares of a newly created class of Issuer common shares that has voting but no economic rights (together with the OpCo units, the “Paired Equity Interests”). Each Paired Equity Interest would be exchangeable, at the holder’s election, for one Class A Share of the Issuer. This agreement in principle is non-binding and subject to, among other things, satisfactory completion of due diligence by both the Issuer and Stagwell Media and the negotiation of definitive documentation. Accordingly, there is no assurance that a definitive agreement will be reached, or that the Proposed Transaction will occur, on the terms and conditions described herein or at all. A copy of a press release announcing this agreement in principle is attached hereto as Exhibit G and the information in the press release is incorporated herein by reference.
Item 5. Interest in Securities of the Issuer.
Subparts (a) and (b) of Item 5 of the Schedule 13D are hereby amended and restated as follows:
Calculations of the percentage of Class A Shares beneficially owned are based on the number of outstanding Class A Shares of the Issuer beneficially owned by the applicable Reporting Person plus the maximum number of Class A Shares issuable upon conversion of Preference Shares beneficially owned by such Reporting Person that are currently eligible for conversion on and subject to the Ownership Limitation described in Item 6 and assumes that there are a total of 72,740,767 Class A Shares outstanding (which is the number of Class A Shares reported to be outstanding, as of July 24, 2020, in the Issuer’s quarterly report for the quarter ended June 30, 2020 filed by the Issuer on August 10, 2020 on Form 10-Q).
The aggregate number and percentage of shares of Class A Shares beneficially owned by each Reporting Person and, for each Reporting Person, the number of Class A Shares as to which there is sole power to vote or to direct the vote, shared power to vote or to direct the vote, sole power to dispose or to direct the disposition, or shared power to dispose or to direct the disposition are set forth on rows 7 through 11 and row 13 of the cover pages of this Amendment No. 2 and are incorporated herein by reference.
As of the date hereof, SAH directly holds 14,285,714 Class A Shares and 50,000 Preference Shares. The current aggregate liquidation preference of the Preference Shares is $56,520,966, subject to an 8% accretion, compounded quarterly until March 14, 2024. The current Conversion Price is $5.00 per Preference Share, subject to customary anti-dilution protection, and therefore, the Preference Shares are convertible into 11,304,193 Class A Shares, before giving effect to the Ownership Limitation described in Item 6.
As of the date hereof, The Stagwell Group LLC directly holds 115,000 Class A Shares.
As of the date hereof, Mark J. Penn directly holds 602,500 Class A Shares, of which 577,500 are shares of unvested restricted stock that are not scheduled to vest until December 31, 2022 subject to achievement of financial performance targets and continued employment.
The Stagwell Group LLC is the manager of SAH. Mark J. Penn is the controlling person of The Stagwell Group LLC.
To the best knowledge of the Reporting Persons, none of the individuals named in Item 2 beneficially owns any Class A Shares except as described herein.
Neither the filing of this Amendment No. 2 nor any of its contents shall be deemed to constitute an admission that any of the Reporting Persons is the beneficial owner of any securities covered by this statement for purposes of Section 13(d) of the Exchange Act of 1934, as amended (the “Exchange Act”), or for any other purpose, except to the extent of its or his pecuniary interest therein, if any, and such beneficial ownership is expressly disclaimed. The filing of this statement should not be construed to be an admission that any Reporting Person is a member of a “group” for the purposes of Sections 13(d) or 13(g) of the Exchange Act.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer.
The disclosure set forth under Item 4 of this Amendment No. 2 is incorporated herein by reference.
Item 7. Material to be Filed as Exhibits
Exhibit G Press Release, dated October 6, 2020.
After reasonable inquiry and to the best of its or his knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct.
Date: October 6, 2020
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STAGWELL AGENCY HOLDINGS LLC
By: The Stagwell Group LLC, its manager
By: /s/ Mark J. Penn
Name: Mark J. Penn
Title: Manager
THE STAGWELL GROUP LLC
By: /s/ Mark J. Penn
Name: Mark J. Penn
Title: Manager
/s/ Mark J. Penn
Mark J. Penn
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