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(Address of Principal Executive Offices) (Zip Code)
Registrant’s telephone number, including area code: (i831) i724-1011
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
i☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
i☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
i☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
i☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
iCommon Stock, $0.01 par value
iGVA
iNew York Stock Exchange
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company i☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01. Entry into a Material Definitive Agreement
Convertible Note Offering
On May 11, 2023, Granite Construction Incorporated (the “Company”) closed its offering of $373.75 million aggregate principal amount of its 3.75% convertible senior notes due 2028 (the “Notes”) for gross proceeds of $373.75 million. The proceeds include the full exercise of the option by the initial purchasers to purchase an additional $48.75 million aggregate principal amount of the Notes granted by the Company to the initial purchasers. The Notes were sold in a private offering to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). The Notes and the shares of the Company’s common stock issuable upon conversion of
the Notes, if any, have not been and will not be registered under the Securities Act or applicable state securities laws, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state securities laws.
The net proceeds from the sale of the Notes were approximately $364.4 million, after deducting the initial purchasers’ discount. The Company used approximately $53.0 million of the net proceeds from the offering to pay the cost of the Capped Call Transactions (as defined below). In addition, the Company used approximately $198.8 million of the net proceeds and issued 1,390,500 shares of the Company’s common stock in exchange for approximately $198.7 million aggregate principal amount of the Company’s 2.75% convertible senior notes due 2024 (the “2024 Notes”) concurrent with the offering in separate and individually
negotiated transactions. The Company also used approximately $13.2 million of the net proceeds to pay the cost of terminating the portion of its existing warrant transactions that correspond to the 2024 Notes exchanged. The Company intends to use the remainder of the net proceeds from the offering to repay amounts outstanding under its revolving credit facility and for general corporate purposes.
The Notes were issued pursuant to an indenture, dated as of May 11, 2023 (the “Indenture”), between the Company and Wilmington Trust, National Association (the “Trustee”). The Indenture and the Notes provide, among other things, that the Notes are the senior unsecured obligations of the Company. The Notes will bear interest at a rate of 3.75% per year, and are payable semiannually in arrears on May 15 and November 15 of each year, beginning on November
15, 2023. The Notes will mature on May 15, 2028, unless earlier converted, redeemed or repurchased.
Prior to the close of business on the business day immediately preceding November 15, 2027, the Notes will be convertible at the option of the holders only upon the occurrence of certain events and during certain periods. Thereafter, the Notes will be convertible at the option of the holders at any time until the close of business on the second scheduled trading day immediately preceding the maturity date.
The initial conversion rate will be 21.6807 shares of the Company’s common stock per$1,000 principal amount of Notes (equivalent to an initial conversion price of approximately $46.12 per share of the Company’s common stock), subject to adjustment if certain events occur. The initial conversion price represents a conversion premium of approximately 30.0% to the $35.48 per share last reported sale price of the Company’s common stock on May 8, 2023 on the New York Stock Exchange. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of
its common stock or a combination of cash and shares of its common stock, at its election. The Company will not be able to redeem the Notes prior to May 20, 2026. On or after May 20, 2026, the Company will be able to redeem for cash all or any portion of the Notes, at its option, if the last reported sale price of the Company’s common stock is equal to or greater than 130% of the conversion price for a specified period of time, at a redemption price equal to 100% of the aggregate principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.
If the Company undergoes a “fundamental change” as defined in the Indenture, holders may require the Company to repurchase for cash all or any portion of their Notes at a fundamental change repurchase price equal to 100% of the principal amount of the Notes to be repurchased plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date.
If certain corporate events that constitute a “make-whole fundamental change” as set forth in the Indenture occur prior to the maturity date of the Notes or if the Company delivers a notice of redemption, the Company will, in certain circumstances, increase the conversion rate for a holder who elects to convert its Notes in connection with such event or notice of redemption.
The Indenture contains customary events of default. In the case of an event of default arising from certain events of bankruptcy, insolvency or reorganization, with respect to the Company or its significant subsidiaries, all outstanding Notes will become due and payable immediately without further action or notice. If any other event of default occurs and is continuing, then the Trustee or the holders of at least 25% in aggregate principal amount of the Notes then outstanding may declare the Notes due and payable immediately.
The foregoing description of the Indenture and the Notes is a summary only and is qualified in its entirety by reference to the Indenture and form of Note attached as Exhibit 4.1 and 4.2, respectively, to this Current Report on Form 8-K and incorporated herein by reference.
Related Capped Call Transactions
On May 8, 2023, the Company entered into privately negotiated capped call transactions (the “Base Capped Call Transactions”) in connection with the offering of the Notes, with certain of the initial purchasers of the Notes or their respective affiliates and certain other financial institutions (the “option counterparties”). In addition, on May 9, 2023, in connection with the initial purchasers’ exercise of their option to purchase additional Notes, the Company entered into additional capped call transactions (the “Additional Capped Call Transactions” and, together with the Base Capped Call Transactions, the “Capped Call Transactions”) with each of the option
counterparties.
The Capped Call Transactions are expected generally to reduce the potential dilution to the Company’s common stock upon conversion of the Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted Notes, as the case may be. If, however, the market price per share of the Company’s common stock, as measured under the terms of the Capped Call Transactions, exceeds the cap price of the Capped Call Transactions, there would nevertheless be dilution and/or there would not be an offset of such cash payments, in each case, to the extent that such market price exceeds the cap price of the Capped Call Transactions.
The cap price of the Capped Call Transactions will initially be $79.83 per share, which represents a premium of 125% over the last reported sale price of the Company’s common stock of $35.48 per share on the New York Stock Exchange on May 8, 2023, and is subject to certain adjustments under the terms of the Capped Call Transactions.
The foregoing description of the Capped Call Transactions is a summary only and is qualified in its entirety by reference to the confirmations of the Capped Call Transactions, the form of which is attached as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.
Exchange Agreement
On May 8, 2023, the Company entered into separate, individually negotiated exchange agreements (the “Exchange Agreements”) with a limited number of holders of the Company’s 2024 Notes.
Pursuant to the Exchange Agreements, the Company paid approximately $198.8 million of the net proceeds from the sale of the Notes and issued approximately 1.39 million shares of the Company’s common stock in exchange for approximately $198.7 million in aggregate principal amount of the 2024 Notes (the “2024 Notes Exchanges”). All 2024 Notes received in the 2024 Notes Exchanges were canceled.
Following the exchanges described above, approximately $31.3 million in aggregate principal amount of the 2024 Notes remain outstanding.
Unwind Transactions
In connection with the 2024 Notes Exchanges, on May 8, 2023, the Company entered into partial unwind agreements (the “Unwind Agreements”) with certain financial institutions to unwind a portion of the convertible note hedge and warrant transactions entered into in connection with the offering of the 2024 Notes (the “Unwind Transactions”).
Pursuant to the Unwind Agreements, the Company received 1.39 million shares of the Company’s common stock (and cash in lieu of any fractional shares) in respect of the unwind of the portion of the existing convertible note hedge transactions that correspond to the 2024 Notes Exchanges described above and paid $13.2 million in cash in respect of the unwind of the portion of the existing warrant transactions that correspond to the 2024 Notes Exchanges described above.
Item 1.02. Termination of a Material Definitive Agreement
The information set forth under Item 1.01 of this Current Report on Form 8-K with respect to the Unwind Transactions is incorporated herein by reference.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth under Item 1.01 of this Current Report on Form 8-K with respect to the Convertible Note Offering, Indenture and Capped Call Transactions is incorporated herein by reference.
Item 3.02. Unregistered Sales of Equity Securities.
The information set forth under Item 1.01 of this Current Report on Form 8-K with respect to the Convertible Notes Offering and Exchange Agreements is incorporated herein by reference.
The Company offered and sold the Notes to the initial purchasers in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act, and for resale by the Initial Purchasers to persons reasonably believed to be qualified institutional buyers pursuant to the exemption from registration provided by Rule 144A under the Securities Act. The Company relied on these exemptions from registration based in part on representations made by the initial purchasers. The Company issued common stock to the holders of the 2024 Notes pursuant to Exchange Agreements in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act. The
Company relied on this exemption from registration based in part on representations made by the holders of the 2024 Notes.
Forward-Looking Statements
Any statements contained in this Current Report on Form 8-K that are not based on historical facts, including statements about the use of proceeds and the potential impact of the Capped Call Transactions constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are identified by words such as “expects,”“estimates,”“intends,”“plans,”“potential,”“may,”“will,”“could,”“would” and the negatives thereof or other comparable terminology or by the context in which they are made. These forward-looking statements are predictions reflecting the best judgment of the Company’s senior management and reflect the Company’s current expectations regarding
the use of proceeds and the potential impact of the Capped Call Transactions. These expectations may or may not be realized. Some of these expectations may be based on beliefs, assumptions or predictions that may prove to be incorrect. In addition, the Company’s business and operations involve numerous risks and uncertainties, many of which are beyond the Company’s control, which could result in the Company’s expectations not being realized or otherwise materially affect the Company’s business, financial condition, results of operations, cash flows and liquidity. Such risks and uncertainties include, but are not limited to, the effects
of entering into the Capped Call Transactions, the 2024 Notes Exchanges and the Unwind Transactions, and those described in greater detail in the Company’s filings with the Securities and Exchange Commission, particularly those described in the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.
Due to the inherent risks and uncertainties associated with the Company’s forward-looking statements, the reader is cautioned not to place undue reliance on them. The reader is also cautioned that the forward-looking statements contained herein speak only as of the date of this Current Report on Form 8-K and, except as required by law; the Company undertakes no obligation to revise or update any forward-looking statements for any reason.
Cover Page Interactive Data File (formatted as Inline XBRL)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
