HRG Group

HRG Group was an American holding company whose corporate history stretched from mid-century offshore oil exploration to a diversified portfolio of insurance, consumer products, specialty finance, and other operating businesses. The company originated in 1953 as Zapata Petroleum Corporation, founded by George H. W. Bush and a group of business associates. Its early activities centered on oil exploration and offshore drilling, and the related Zapata Offshore Company became an important part of the enterprise. The company expanded its drilling activities across the Gulf of Mexico and other international areas, while also developing interests in mining, construction, dredging, fishing, and energy-related services. Zapata's original oil strategy eventually became difficult to sustain. The collapse in oil prices during the 1980s contributed to heavy losses, high debt, and repeated restructuring efforts. In 1982, Zapata Offshore adopted the name Zapata Corporation. During the following decade the company sold or reduced many of its drilling assets and explored a succession of new directions. It moved toward fishing and marine protein businesses, including menhaden-based products, and later held interests in industrial businesses such as Safety Components International. These changes reflected the company's broader transition from an operating energy company into an asset-owning corporate vehicle. The company came under the control of investor Malcolm Glazer after a proxy contest in the mid-1990s. Avram Glazer subsequently became chief executive and president, and the company's de facto headquarters shifted from Houston to Rochester, New York. Between 1998 and 2000, Zapata attempted to reposition itself as an Internet media business under the zap.com name. It announced plans involving several websites and made an unsuccessful unsolicited proposal for Excite. The initiative coincided with the wider dot-com boom but did not produce a durable operating business; Zapata later returned to an investment and holding-company orientation. Zapata sold its remaining interest in Safety Components International in 2005 and its remaining Omega Protein stock in 2006. After those disposals, the company had no active subsidiary for a period. In 2009, the Glazer family sold its controlling stake to Philip Falcone's Harbinger Capital, and Zapata was renamed Harbinger Group Inc. The renamed company became a platform for acquiring and managing controlling interests in other businesses. Between 2010 and 2011, Harbinger Capital transferred its controlling interest in Spectrum Brands to the group, making Spectrum Brands a central portfolio company. Harbinger Group also acquired Old Mutual's U.S. life-insurance holdings in 2011, creating a significant insurance platform. The group later participated in specialty finance through Salus Capital. In 2013, Salus and Cerberus Capital Management provided financing to RadioShack. The financing included operating restrictions that became controversial during RadioShack's later financial distress, and the group and related insurance interests were exposed to the retailer's 2015 bankruptcy. This episode illustrated both the opportunities and risks of HRG's strategy of investing through controlled subsidiaries and financing affiliates. In February 2018, HRG announced a merger with Spectrum Brands, the consumer-products company in which it held a controlling interest. The transaction closed on July 13, 2018. Following completion, the HRG Group name was discontinued and the standalone holding-company structure ceased to exist. HRG is therefore best understood as a defunct corporate holding brand and a successor to the Zapata corporate lineage, rather than as a continuing consumer-facing brand.

HRG Group's corporate lineage began with Zapata Petroleum Corporation, established in 1953 by George H. W. Bush, John Overbey, Hugh Liedtke, Bill Liedtke, and Thomas J. Devine. The early company pursued oil exploration, while Zapata Offshore, formed in 1954, developed offshore drilling capabilities. It operated in the Gulf of Mexico and in several overseas locations, using specialized drilling rigs and pursuing contracts with major oil companies. In 1959, Bush obtained control of Zapata Offshore and separated it from the petroleum business that later merged with South Penn Oil to form Pennzoil. During the 1960s and 1970s, Zapata expanded beyond offshore drilling into mining, construction, dredging, fishing, and related activities. The sinking of the Maverick rig during Hurricane Betsy in 1965 caused a substantial insured asset loss. The company also attempted to diversify through corporate acquisitions, including an unsuccessful effort to obtain control of United Fruit in 1969. Zapata's financial condition deteriorated in the late 1970s and 1980s as weak operations, debt, and falling oil prices undermined returns. In 1982, Zapata Offshore became Zapata Corporation. The company recorded substantial losses and undertook repeated restructurings. It sold twelve drilling rigs in 1990 and increasingly moved away from exploration toward fishing, marine protein, and energy-service assets. A proposed 1993 financing and stock transaction was challenged by Malcolm Glazer, who held a large stake and opposed dilution. Glazer prevailed in a proxy contest in 1994 and became chairman. In 1995, Avram Glazer became president and chief executive. The company's practical headquarters moved from Houston to Rochester, New York. Zapata disposed of much of its energy portfolio and developed interests in marine protein, including Omega Protein, and in industrial safety products through Safety Components International. From 1998 through 2000, Zapata experimented with an Internet-media strategy using the zap.com name. It announced plans involving several websites and made an unsuccessful unsolicited bid for Excite. The dot-com initiative did not become a lasting operating platform, and the company subsequently returned to an investment-company model. Zapata sold 77.3 percent of Safety Components International in 2005 and its remaining Omega Protein shares in 2006, leaving it without an active subsidiary at that point. In 2009, Harbinger Capital acquired the Glazer family's controlling position. Zapata was renamed Harbinger Group Inc. and traded under the HRG ticker on the New York Stock Exchange. The new group concentrated on building controlling or influential positions in operating companies. During 2010 and 2011, it received a controlling stake in Spectrum Brands and acquired Old Mutual's U.S. life-insurance holdings. These transactions transformed the company from a largely inactive successor to Zapata into a diversified financial holding group. Harbinger Group's later activities included specialty lending through Salus Capital. In 2013, Salus and Cerberus financed RadioShack under covenants limiting store closures and refinancing options. RadioShack's subsequent Chapter 11 filing in 2015 created losses and impairment exposure for related investors and highlighted the risks of restrictive rescue financing. The final stage of the company was its combination with Spectrum Brands. Announced in February 2018 and completed on July 13 of that year, the transaction merged HRG with the company it controlled. The HRG name was retired, ending the independent corporate existence of HRG Group.

• 2018

  Merger with Spectrum Brands is completed

  [1]HRG Groupen.wikipedia.org

  The merger closes on July 13 and the HRG Group name is discontinued.

• 2011

  Insurance platform is added

  [1]HRG Groupen.wikipedia.org

  Harbinger Group acquires Old Mutual's U.S. life-insurance holdings while consolidating control of Spectrum Brands.

• 2009

  Zapata is renamed Harbinger Group

  [1]HRG Groupen.wikipedia.org

  Harbinger Capital acquires the controlling stake held by the Glazer family and the company changes its name.

• 1994

  Malcolm Glazer gains control

  [1]HRG Groupen.wikipedia.org

  Glazer takes control following a proxy contest and becomes chairman of the company.

• 1982

  Zapata Offshore becomes Zapata Corporation

  [1]HRG Groupen.wikipedia.org

  The offshore-drilling company adopts the broader Zapata Corporation name during a period of restructuring and strategic change.

• 1963

  Zapata Petroleum merges with South Penn Oil

  [1]HRG Groupen.wikipedia.org

  The petroleum business combines with South Penn Oil, while Zapata Offshore continues as a separate corporate activity.

• 1954

  Zapata Offshore is formed

  [1]HRG Groupen.wikipedia.org

  The company creates an offshore-drilling subsidiary and begins developing mobile drilling-rig capabilities.

• 1953

  Zapata Petroleum Corporation is founded

  [1]HRG Groupen.wikipedia.org

  George H. W. Bush and business partners establish the oil company that forms the beginning of HRG Group's corporate lineage.

A diversified investment and holding company that shifted capital among industrial, marine-protein, insurance, consumer-products, and specialty-finance businesses.

• Energy services · 1954

  Offshore drilling

  The original operating business involved offshore oil exploration and drilling. Zapata Offshore developed and operated mobile drilling rigs, including jack-up equipment, and pursued contracts in the Gulf of Mexico, the Caribbean, the Persian Gulf, Trinidad, Borneo, Colombia, and other locations. This business was central to the company's identity before debt, weak returns, and oil-price declines prompted asset sales and strategic retrenchment.

• Food ingredients

  Marine protein

  After reducing its energy activities, Zapata owned businesses connected with fishing and marine-protein production, including Omega Protein. These operations processed menhaden and produced protein products for commercial markets. The business represented the company's mid-1990s and 2000s attempt to build value around marine resources rather than offshore energy.

• Automotive safety materials

  Safety Components International

  Zapata built a controlling interest in Safety Components International, a manufacturer of air-bag fabrics and cushions. The investment formed part of the company's shift toward industrial and specialty manufacturing assets. Zapata sold most of its position in 2005, ending this line as a material part of its portfolio.

• Insurance · 2011

  Insurance operations

  Under the Harbinger Group name, the company expanded into U.S. life insurance through its acquisition of Old Mutual U.S. Life Holdings in 2011. Insurance became one of the group's principal financial holdings alongside its controlling interest in Spectrum Brands and related investment activities.

• Financial services

  Specialty finance

  Harbinger Group participated in specialty finance through Salus Capital, which provided asset-based lending and other financing activities. Salus's 2013 financing of RadioShack became the most visible example of this strategy and generated exposure when the retailer later entered bankruptcy.

• 1998zap.com Internet repositioning

  United States

  Zapata attempted to recast itself as an Internet-media company under the zap.com name and announced plans involving websites such as ChatPlanet, TravelPage, and DailyStocks.com.

  Outcome. The initiative did not produce a durable Internet operating business, and the company later returned to a holding-company strategy.

  Source

• 2018

  Merge HRG Group with Spectrum BrandsM&A

  Background

  Spectrum Brands was HRG's controlled portfolio company, making a combination an avenue for simplifying the ownership structure.

  Action taken

  HRG announced and completed a merger with Spectrum Brands on July 13, 2018.

  Aftermath

  HRG Group ceased to operate as a standalone corporate identity and its name was discontinued.

  Source

• 2013

  Finance RadioShack through Salus CapitalOther

  Background

  RadioShack was experiencing severe financial pressure and sought financing from specialty lenders.

  Action taken

  Salus Capital, together with Cerberus Capital Management, provided financing that restricted store closures and refinancing activity.

  Aftermath

  RadioShack later filed for Chapter 11 in 2015. The financing restrictions were widely described as contributing to the retailer's difficulty in rapidly closing unprofitable locations, and HRG-related interests incurred exposure to the bankruptcy.

  Reported RadioShack-related net exposure and impairment. $150 million net exposure → $105.0 million impairment recognized (As of March 31, 2015)

  Source

• 2009

  Rebrand and transition to Harbinger GroupStrategy

  Background

  Following Harbinger Capital's acquisition of the Glazer family's controlling stake, the successor to Zapata required a new corporate identity and investment direction.

  Action taken

  The company changed its name from Zapata Corporation to Harbinger Group Inc. and adopted the HRG ticker.

  Aftermath

  The renamed company became a platform for acquiring controlling stakes in insurance, consumer products, and other businesses.

  Source

1. 1HRG Groupen.wikipedia.org