SC 13D

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

(Rule 13d-101)

INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT

TO § 240.13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO

§ 240.13d-2(a)

(Amendment No. )¹

MDC Partners Inc.

(Name of Issuer)

Class A Subordinate Voting Shares, no par value

(Title of Class of Securities)

552697104

(CUSIP Number)

JOAN JIANG
Chief Compiance Officer

Indaba Capital Management, L.P.

One Letterman Drive, Building D, Suite DM700

San Francisco, California 94129

(415) 680-1180

STEVE WOLOSKY, ESQ.
OLSHAN FROME WOLOSKY LLP

1325 Avenue of The Americas

New York, New York 10019

(212) 451-2300

(Name, Address and Telephone Number of Person

Authorized to Receive Notices and Communications)

May 24, 2021

(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.

_______________

¹       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).

CUSIP No. 552697104

	1	NAME OF REPORTING PERSON
			INDABA CAPITAL MANAGEMENT, L.P.
	2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP				(a) ☐
						(b) ☒
	3	SEC USE ONLY
	4	SOURCE OF FUNDS
			AF
	5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)				☐
	6	CITIZENSHIP OR PLACE OF ORGANIZATION
			DELAWARE
NUMBER OF			7	SOLE VOTING POWER
SHARES
BENEFICIALLY					- 0 -
OWNED BY			8	SHARED VOTING POWER
EACH
REPORTING					9,377,399
PERSON WITH			9	SOLE DISPOSITIVE POWER
					- 0 -
			10	SHARED DISPOSITIVE POWER
					9,377,399
	11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
			9,377,399
	12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES				☐
	13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
			11.9%
	14	TYPE OF REPORTING PERSON
			IA, PN

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CUSIP No. 552697104

	1	NAME OF REPORTING PERSON
			IC GP, LLC
	2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP				(a) ☐
						(b) ☒
	3	SEC USE ONLY
	4	SOURCE OF FUNDS
			AF
	5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)				☐
	6	CITIZENSHIP OR PLACE OF ORGANIZATION
			DELAWARE
NUMBER OF			7	SOLE VOTING POWER
SHARES
BENEFICIALLY					- 0 -
OWNED BY			8	SHARED VOTING POWER
EACH
REPORTING					9,377,399
PERSON WITH			9	SOLE DISPOSITIVE POWER
					- 0 -
			10	SHARED DISPOSITIVE POWER
					9,377,399
	11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
			9,377,399
	12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES				☐
	13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
			11.9%
	14	TYPE OF REPORTING PERSON
			OO, HC

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CUSIP No. 552697104

	1	NAME OF REPORTING PERSON
			DEREK C. SCHRIER
	2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP				(a) ☐
						(b) ☒
	3	SEC USE ONLY
	4	SOURCE OF FUNDS
			AF
	5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)				☐
	6	CITIZENSHIP OR PLACE OF ORGANIZATION
			USA
NUMBER OF			7	SOLE VOTING POWER
SHARES
BENEFICIALLY					- 0 -
OWNED BY			8	SHARED VOTING POWER
EACH
REPORTING					9,377,399
PERSON WITH			9	SOLE DISPOSITIVE POWER
					- 0 -
			10	SHARED DISPOSITIVE POWER
					9,377,399
	11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
			9,377,399
	12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES				☐
	13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
			11.9%
	14	TYPE OF REPORTING PERSON
			IN, HC

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CUSIP No. 552697104

The following constitutes the Schedule 13D filed by the undersigned (the “Schedule 13D”).

Item 1. Security and Issuer.

This statement relates to the Class A Subordinate Voting Shares, no par value (the “Shares”), of MDC Partners Inc., a Canadian corporation (the “Issuer”). The address of the principal executive offices of the Issuer is One World Trade Center, Floor 65, New York, New York 10007.

Item 2. Identity and Background.

(a) This statement is filed by:

(i) Indaba Capital Management, L.P., a Delaware limited partnership (“Investment Manager”), as the investment manager to Indaba Capital Fund, L.P. (the “Fund”) with respect to Shares directly held by the Fund;

(ii) IC GP, LLC, a Delaware limited liability company (“IC GP”), as the Investment Manager’s sole general partner; and

(iii) Derek C. Schrier, a United States citizen (“Mr. Schrier”), as the managing member of IC GP.

Each of the foregoing is referred to as a “Reporting Person” and collectively as the “Reporting Persons.” Each of the Reporting Persons is party to that certain Joint Filing Agreement, as further described in Item 6. Accordingly, the Reporting Persons are hereby filing a joint Schedule 13D.

(b)       The principal business address of the Reporting Persons is One Letterman Drive, Building D, Suite DM700, San Francisco, California 94129.

(c)       The Investment Manager is principally involved in the business of providing investment advisory and investment management services to certain clients, including the Fund. IC GP is principally involved in the business of serving as the general partner of the Investment Manager. Mr. Schrier is the Managing Member of IC GP.

(d)       No Reporting Person has, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors).

(e)       No Reporting Person has, during the last five years, been party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

(f)       The Investment Manager is a Delaware limited partnership. IC GP is a Delaware limited liability company. Mr. Schrier is a citizen of the United States.

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CUSIP No. 552697104

Item 3. Source and Amount of Funds or Other Consideration.

The Shares directly held by the Fund and beneficially owned by the Reporting Persons reported herein were purchased with working capital (which may, at any given time, include margin loans made by brokerage firms in the ordinary course of business) in open market purchases. The aggregate purchase price of such Shares was approximately $22,397,124, including brokerage commissions.

Item 4. Purpose of Transaction.

The Shares directly held by the Fund and beneficially owned by the Reporting Persons reported herein were purchased for investment purposes in the ordinary course of business. The Shares were purchased based on the Reporting Persons’ belief that the Shares, when purchased, were undervalued and represented an attractive investment opportunity.

On May 26, 2021, the Investment Manager delivered a letter (the “Letter”) to the Special Committee of the Board of Directors of the Issuer expressing its serious concerns with the Issuer’s proposed combination with Stagwell Media LP, including that the transaction does not provide fair consideration to the Issuer’s shareholders. The Investment Manager stated its intention to vote against the transaction in its current form. The foregoing description of the Letter does not purport to be complete and is qualified in its entirety by reference to the full text of the Letter, which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

No Reporting Person has any present plan or proposal which would relate to or result in any of the matters set forth in subparagraphs (a) - (j) of Item 4 of Schedule 13D except as set forth herein or such as would occur upon or in connection with completion of, or following, any of the actions discussed herein. The Reporting Persons intend to review their investment in the Issuer on a continuing basis. Depending on various factors including, without limitation, the Issuer’s financial position and investment strategy, the price levels of the Shares, conditions in the securities markets and general economic and industry conditions, the Reporting Persons may in the future take such actions with respect to their investment in the Issuer as they deem appropriate including, without limitation, engaging in communications with management and the Board of the Issuer, exchanging information with the Issuer pursuant to appropriate confidentiality or similar agreements, engaging in discussions with stockholders of the Issuer or other third parties about the Issuer and the Reporting Persons’ investment, including potential business combinations or dispositions involving the Issuer or certain of its businesses, making recommendations or proposals to the Issuer concerning changes to the capitalization, ownership structure, board structure (including board composition), potential business combinations or dispositions involving the Issuer or certain of its businesses, or suggestions for improving the Issuer’s financial and/or operational performance, acquiring additional Shares and/or other equity, debt, notes, instruments or other securities of the Issuer (collectively, “Securities”) or disposing of some or all of the Securities beneficially owned by them, in public market or privately negotiated transactions, entering into financial instruments or other agreements that increase or decrease the Reporting Persons’ economic exposure with respect to their investment in the Issuer and/or otherwise changing their intention with respect to any and all matters referred to in Item 4 of Schedule 13D.

Item 5. Interest in Securities of the Issuer.

The aggregate percentage of Shares reported owned by each person named herein is based upon 78,601,838 Shares outstanding, as of May 10, 2021, which is the total number of Shares outstanding as reported in the Issuer’s definitive proxy statement filed with the Securities and Exchange Commission on May 10, 2021.

The Shares beneficially owned by the Reporting Persons are directly held by the Fund. Pursuant to an Investment Management Agreement, the Fund and its general partner have delegated all voting and investment power over the Shares and the Swap Agreements (as defined below) directly held by the Fund to the Investment Manager. As a result, each of the Investment Manager, IC GP, as the general partner of Investment Manager, and Mr. Schrier, as Managing Member of IC GP, may be deemed to exercise voting and investment power over such securities. The Fund specifically disclaims beneficial ownership of such securities by virtue of its inability to vote or dispose of such securities as a result of such delegation to the Investment Manager.

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CUSIP No. 552697104

A. Investment Manager

(a) The Investment Manager, as the investment manager of the Fund, may be deemed to beneficially own the 9,377,399 Shares directly held by the Fund.

Percentage: 11.9%

(b) 1. Sole power to vote or direct vote: 0
2. Shared power to vote or direct vote: 9,377,399
3. Sole power to dispose or direct the disposition: 0
4. Shared power to dispose or direct the disposition: 9,377,399

B. IC GP

(a) IC GP, as the general partner of the Investment Manager, may be deemed to beneficially own the 9,377,399 Shares directly held by the Fund.

Percentage: 11.9%

(b) 1. Sole power to vote or direct vote: 0
2. Shared power to vote or direct vote: 9,377,399
3. Sole power to dispose or direct the disposition: 0
4. Shared power to dispose or direct the disposition: 9,377,399

C. Mr. Schrier

(a) Mr. Schrier, as the managing member of IC GP, may be deemed to beneficially own the 9,377,399 Shares directly held by the Fund.

Percentage: Approximately 11.9%

(b) 1. Sole power to vote or direct vote: 0
2. Shared power to vote or direct vote: 9,377,399
3. Sole power to dispose or direct the disposition: 0
4. Shared power to dispose or direct the disposition: 9,377,399

(c) There have been no transactions in the Shares by the Reporting Persons during the past 60 days.

(d) No person other than the Reporting Persons or the Fund is known to have the right to receive, or the power to direct the receipt of dividends from, or proceeds from the sale of, the Shares.

(e) Not applicable.

7 

CUSIP No. 552697104

Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer.

The Fund has entered into cash-settled total return swap agreements with Morgan Stanley Capital Services LLC (the “Swap Agreements”), which represent economic exposure to an aggregate of 2,057,270 notional Shares, representing approximately 2.6% of the outstanding Shares. The Swap Agreements provide the Fund with economic results that are comparable to the economic results of ownership but do not provide it with the power to vote or direct the voting or dispose of or direct the disposition of the Shares that are the subject of the Swap Agreements (such shares, the “Subject Shares”). Taking into account the Subject Shares, the Fund has economic exposure to an aggregate of 11,434,669 Shares, representing approximately 14.5% of the outstanding Shares. The Reporting Persons disclaim beneficial ownership of the Subject Shares.

On May 27, 2021, the Reporting Persons entered into a Joint Filing Agreement in which the Reporting Persons agreed to the joint filing on behalf of each of them of statements on Schedule 13D with respect to the securities of the Issuer to the extent required by applicable law. The Joint Filing Agreement is attached hereto as Exhibit 99.2 and is incorporated herein by reference.

Other than as described herein, there are no contracts, arrangements, understandings or relationships among the Reporting Persons, or between the Reporting Persons and any other person, with respect to the securities of the Issuer.

Item 7. Material to be Filed as Exhibits.

99.1 Letter to the Special Committee, dated May 26, 2021.

99.2 Agreement as to Joint Filing of Schedule 13D, dated May 27, 2021, by and among the Investment Manager, IC GP and Mr. Schrier.

8 

CUSIP No. 552697104

SIGNATURES

After reasonable inquiry and to the best of his knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct.

Dated: May 27, 2021

INDABA CAPITAL MANAGEMENT, L.P.
By:	IC GP, LLC, its general partner
By:	/s/ Derek C. Schrier
	Name: Derek C. Schrier
	Title: Managing Member
IC GP, LLC
By:	/s/ Derek C. Schrier
	Name: Derek C. Schrier
	Title: Managing Member
/s/ Derek C. Schrier
DEREK C. SCHRIER

9

EX-99.1

EXHIBIT 99.1

May 26, 2021 The Special Committee of the Board of Directors MDC Partners Inc. One World Trade Center, Floor 65 New York, NY 10007	Indaba Capital Management L.P. One Letterman Drive Building D, Suite 700 The Presidio of San Francisco San Francisco, CA 94129 t 415.680.1180 f 415.680.1181

Dear Members of the Special Committee,

As you know, Indaba Capital Management L.P. (together with its affiliates, “Indaba” or “we”) is the largest independent shareholder of MDC Partners Inc. (“MDC” or the “Company”) with economic exposure equal to almost 15% of the Company’s outstanding shares. You are also well aware of our long history of investing across MDC’s capital structure and supporting the Company’s management team. This is why we hoped that the Special Committee of independent directors would be responsive to our privately conveyed concerns regarding the proposed combination with Stagwell. Unfortunately, it appears you are still comfortable trying to push through this conflict-riddled and poorly-structured merger.

Since we are not an activist investor, we have spent months explaining to you and Mark Penn (MDC’s Chief Executive Officer and Stagwell’s Managing Partner) why the deal’s current terms do not provide anything close to fair consideration to shareholders. It is regrettable that your intransigence is now forcing us to disclose our intent to vote against the transaction at next month’s Special Meeting of Shareholders.

Rather than continuing to try to ram through an unfair deal over the objections of Indaba and presumably other investors, the Special Committee should take time to reflect upon its obligations to all MDC shareholders. It is confounding to us that the Special Committee is not more focused on addressing shareholder concern given that Mr. Penn runs both MDC and Stagwell. We believe the Special Committee should be laser-focused on eliminating even the appearance of a conflict of interest in light of these circumstances.

We urge the Special Committee to closely consider the following points of concern and feedback as it reflects on its obligations to all shareholders:

· The fairness opinion included in MDC’s S-4 filing related to the transaction reinforces that the combination’s terms are unappealing for shareholders other than Stagwell. The Company acknowledges that “[s]ome of MDC’s directors and executive officers have interests in seeing the Proposed Transactions completed that may be different from, or in addition to, those of other MDC Canada Shareholders.” MDC’s shares closed at $4.67 on May 25, 2021, below the bottom of the fairness opinion’s value range of $4.70 per share to $7.40 per share, clearly showing how poorly shareholders other than Stagwell view the transaction terms.

· We believe that Mr. Penn has all the incentives to root for Stagwell, not MDC Partners Inc. with regards to terms of the pending transaction. We note in the S-4 (page 127) that the carried interest held by Mr. Penn, expressed as a percentage of all carried interest in Stagwell, is equal to 75%. Your CEO and the chair of your board has the ability to personally make a fortune from this combination and its terms which favor his overriding interests. This combination should cause the Special Committee to focus all the more on upholding its fiduciary duties.

· Furthermore, the Special Committee’s fairness opinion was commissioned in late 2020 and is now clearly outdated. Its findings and value range reflect a pandemic-ravaged environment rather than an economy in recovery. Since the opinion was issued on December 21, 2020, an index of comparable public advertising companies’ equities has risen almost 35% and the enterprise values of those companies based on their share prices have increased by over 14% through the close of trading yesterday.¹ Increasing MDC’s enterprise value by a similar amount would increase that range of equity values to a range of approximately $7.28 to approximately $10.37 per share.

· It appears Stagwell’s offer places no value on MDC’s public company structure, revenue and cost synergies, and the benefits of Net Operating Losses (NOLs). In our view, these assets are of significant value to Stagwell.

· The terms do not offer a meaningful control premium, which is disconcerting given the seemingly egregious conflicts of interest at play and the form of consideration being offered (shares of a private company unknown to the market). MDC’s shares still trade at a discount to its public company peers despite a transaction that could yield powerful synergies and offerings. If anything, this combination likely warranted a greater control premium from the start in light of the fact that MDC was not openly shopped before reaching a deal with Stagwell.

Although we believe that management has done an impressive job navigating through the pandemic and driving improvements at MDC, that is not a justification for the Special Committee to essentially rubberstamp the unfair terms desired by Stagwell and Mr. Penn. It is not lost on us that MDC already sold an attractive asset in Sloane & Company LLC to a Stagwell-owned agency last year. Given that MDC’s creative agencies are continuing to win attractive mandates, such as a recent marquee contract with United Airlines, it is even more crucial for the Special Committee to reassess MDC’s value. We firmly believe that Stagwell, which publicly touts billionaire Steve Ballmer as its core investor, can afford to adequately compensate its fellow shareholders.

In closing, Indaba could potentially support a combination if it included terms that provided appropriate value to all shareholders. Most importantly, we believe a reasonable pro forma ownership for shareholders should be in a range of 37.5% to 40% – not the 26% proposed.

Please note that Indaba reserves all rights to take any actions that it deems necessary to protect value for all MDC shareholders, if the Company continues to move forward with the transaction on its current terms.

Sincerely,

/s/ Derek Schrier

Derek Schrier

Managing Partner

Indaba Capital Management, L.P.

CC: Steve Wolosky, Olshan Frome Wolosky LLP

___________________________

¹ Based on an equal-weighted index of WPP PLC, IPG Inc., Omnicom, and Publicis as of market close on May 25, 2021.

EX-99.2

EXHIBIT 99.2

JOINT FILING AGREEMENT

In accordance with Rule 13d-1(k)(1) under the Securities Exchange Act of 1934, as amended, the persons named below agree to the joint filing on behalf of each of them of a Statement on Schedule 13D (including additional amendments thereto) with respect to the shares of Class A Subordinate Voting Shares, no par value, of MDC Partners Inc. This Joint Filing Agreement shall be filed as an Exhibit to such Statement.

Date: May 27, 2021

INDABA CAPITAL MANAGEMENT, L.P.
By:	IC GP, LLC, its general partner
By:	/s/ Derek C. Schrier
	Name: Derek C. Schrier
	Title: Managing Member
IC GP, LLC
By:	/s/ Derek C. Schrier
	Name: Derek C. Schrier
	Title: Managing Member
/s/ Derek C. Schrier
DEREK C. SCHRIER