Granite Construction Incorporated (NYSE: GVA) (“Granite”) today
announced that it intends to offer, subject to market and other
conditions, $325 million in aggregate principal amount of
convertible senior notes due 2030 (the “Convertible Notes”). In
connection with the offering of the Convertible Notes, Granite
expects to grant the initial purchasers of the Convertible Notes an
option to purchase up to an additional $48.75 million aggregate
principal amount of Convertible Notes.
The Convertible Notes will be senior unsecured obligations of
Granite, will bear interest payable semi-annually in arrears on
June 15 and December 15 of each year, beginning on December 15,
2024, and will mature on June 15, 2030, unless earlier converted,
redeemed or repurchased in accordance with their terms. Prior to
the close of business on the business day immediately preceding
December 15, 2029, the Convertible Notes will be convertible at the
option of the holders only upon the occurrence of certain events
and during certain periods. Thereafter, the Convertible 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. Upon conversion, Granite will pay cash
up to the aggregate principal amount of the Convertible Notes to be
converted and pay or deliver, as the case may be, cash, shares of
Granite’s common stock, or a combination of cash and shares of
Granite’s common stock, at Granite’s election, in respect of the
remainder, if any, of its conversion obligation in excess of the
aggregate principal amount of the Convertible Notes being
converted. The interest rate, initial conversion rate, initial
conversion price and other terms of the Convertible Notes will be
determined at the time of the pricing of the offering.
Granite intends to use a portion of the net proceeds from the
offering of the Convertible Notes to pay the cost of entering into
capped call transactions in connection with the Convertible Notes.
In addition, Granite expects to pay a portion of the net proceeds
from the offering to repurchase a portion of its outstanding 2.75%
convertible senior notes due 2024 (the “2024 notes”). Granite also
may use a portion of the net proceeds from the Convertible Notes
offering or issue shares of its common stock to pay the cost of
terminating the portion of its existing warrant transactions (as
defined below) that correspond to the 2024 notes to be repurchased.
Granite also expects to use a portion of the net proceeds from the
offering to repurchase up to $15 million of Granite’s common stock
concurrently with the offering in privately negotiated
transactions. In addition, Granite intends to use a portion of the
net proceeds from the Convertible Notes offering to repay amounts
outstanding under its term loan. Granite intends to use the
remainder of the net proceeds from the offering for general
corporate purposes, which may include acquisitions. If the initial
purchasers exercise their option to purchase additional Convertible
Notes, Granite intends to use a portion of the net proceeds from
the sale of such additional Convertible Notes to pay the cost of
entering into additional capped call transactions and the remainder
of the net proceeds from the sale of the additional Convertible
Notes for general corporate purposes.
Concurrently with the pricing of the offering of the Convertible
Notes, Granite intends to enter into one or more separate and
individually negotiated transactions with one or more holders of
its 2024 notes to repurchase a portion of the outstanding 2024
notes for cash on terms to be negotiated with such holders (the
“2024 notes repurchases”). Granite expects that, in connection with
the 2024 notes repurchases, holders of the 2024 notes may enter
into or unwind various derivative transactions with respect to
Granite’s common stock (including entering into derivatives with
one or more of the initial purchasers in the Convertible Notes
offering or their respective affiliates) and/or purchase or sell
shares of Granite’s common stock concurrently with or shortly after
the pricing of the Convertible Notes offering. This activity could
affect the market price of Granite’s common stock and the initial
conversion price of the Convertible Notes. Granite cannot predict
the magnitude of such market activity or the overall effect it will
have on the price of the Convertible Notes or its common stock.
In connection with the pricing of the Convertible Notes, Granite
also expects to enter into privately negotiated capped call
transactions with one or more of the initial purchasers of the
Convertible Notes, their respective affiliates and/or certain other
financial institutions (the “option counterparties”). The capped
call transactions are expected to cover, subject to anti-dilution
adjustments substantially similar to those applicable to the
Convertible Notes, the number of shares of Granite’s common stock
initially underlying the Convertible Notes. If the initial
purchasers of the Convertible Notes exercise their option to
purchase additional Convertible Notes, Granite expects to enter
into additional capped call transactions with the option
counterparties.
The capped call transactions are expected generally to reduce
the potential dilution to Granite’s common stock upon any
conversion of the Convertible Notes and/or offset any cash payments
Granite is required to make in excess of the principal amount of
converted Convertible Notes, as the case may be. If, however, the
market price per share of Granite’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.
Granite has been advised that, in connection with establishing
their initial hedges of the capped call transactions, the option
counterparties or their respective affiliates may enter into
various derivative transactions with respect to Granite’s common
stock and/or purchase shares of Granite’s common stock concurrently
with or shortly after the pricing of the Convertible Notes. This
activity could increase (or reduce the size of any decrease in) the
market price of Granite’s common stock or the Convertible Notes at
that time.
In addition, the option counterparties or their respective
affiliates may modify their hedge positions by entering into or
unwinding various derivatives with respect to Granite’s common
stock and/or purchasing or selling shares of Granite’s common stock
or other securities of Granite in secondary market transactions
following the pricing of the Convertible Notes and prior to the
maturity of the Convertible Notes (and are likely to do so during
any observation period related to a conversion of the Convertible
Notes, following any repurchase of the Convertible Notes in
connection with any fundamental change or redemption of the
Convertible Notes at Granite’s option or, to the extent Granite
unwinds a corresponding portion of the capped call transactions, in
connection with any other repurchase of the Convertible Notes).
This activity could also cause or hinder an increase or decrease in
the market price of Granite’s common stock or the Convertible
Notes, which could affect the holders’ ability to convert the
Convertible Notes and, to the extent the activity occurs during any
observation period related to a conversion of the Convertible
Notes, it could affect the amount of cash and the number and value
of shares of Granite’s common stock, if any, that holders will
receive upon conversion of the Convertible Notes.
In connection with the issuance of the 2024 notes, Granite
entered into convertible note hedge transactions (the “existing
convertible note hedge transactions”) with certain financial
institutions (the “existing counterparties”), and Granite also
entered into separate warrant transactions (the “existing warrant
transactions”) with the existing counterparties. To the extent
Granite effects any 2024 notes repurchases, Granite intends to
enter into agreements with the existing counterparties to unwind a
corresponding portion of the existing convertible note hedge
transactions and a corresponding portion of the existing warrant
transactions (collectively, the “Unwind Transactions”). In
connection with the Unwind Transactions, Granite expects to enter
into agreements with the existing counterparties and receive a
number of shares of Granite’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 repurchases and make payments in cash or issue shares of
Granite’s common stock in respect of the unwind of the portion of
the existing warrant transactions that correspond to the 2024 notes
repurchases.
In connection with the Unwind Transactions, the existing
counterparties and/or their respective affiliates may enter into or
unwind various derivative transactions with respect to Granite’s
common stock and/or purchase or sell shares of Granite’s common
stock or other securities of Granite in secondary market
transactions concurrently with or shortly after the pricing of the
Convertible Notes. This activity may affect the price of Granite’s
common stock and, in turn, impact the initial conversion price of
the Convertible Notes.
Concurrently with the pricing of the offering of the Convertible
Notes, Granite expects to repurchase up to $15 million of its
common stock from purchasers of the Convertible Notes in privately
negotiated transactions effected with or though one of the initial
purchasers of the Convertible Notes or its affiliate. Granite
expects the purchase price per share of its common stock in such
transactions to equal the closing price per share of its common
stock on the date of pricing the offering of the Convertible Notes.
These repurchases could increase (or reduce the size of any
decrease in) the market price of Granite’s common stock or the
Convertible Notes concurrently with the pricing of the Convertible
Notes, and could result in a higher effective initial conversion
price of the Convertible Notes.
The Convertible Notes will be offered through a private
placement. The Convertible Notes and the shares of Granite’s common
stock issuable upon conversion of the Convertible Notes, if any,
have not been and will not be registered under the Securities Act
of 1933 (the “Securities Act”), or any state securities laws. As a
result, neither the Convertible Notes nor any common stock issuable
upon conversion of the Convertible Notes may be offered or sold in
the United States except pursuant to an applicable exemption from,
or in a transaction not subject to, the registration requirements
of the Securities Act and applicable state securities laws.
Accordingly, the Convertible Notes will be offered only to persons
reasonably believed to be “qualified institutional buyers” under
Rule 144A of the Securities Act. This news release is neither an
offer to sell nor a solicitation of an offer to buy the Convertible
Notes or any common stock issuable upon conversion of the
Convertible Notes, nor shall there be any sale of any securities in
any jurisdiction in which such offer, solicitation or sale would be
unlawful.
Forward-looking Statements
Any statements contained in this news release that are not based
on historical facts, including statements about the offering, the
intended use of proceeds, the terms of the Convertible Notes, the
capped call transactions, the 2024 notes repurchases, the Unwind
Transactions, the share repurchases, third parties entering into or
unwinding derivative transactions with respect to Granite’s common
stock and/or purchasing or selling Granite’s common stock, and the
potential impact of the foregoing on dilution to Granite’s
stockholders or the offset of any cash payments Granite is required
to make in excess of the principal amount of converted Convertible
Notes, the market price of Granite’s common stock or the
Convertible Notes or the initial conversion price of the
Convertible Notes, 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 senior management and reflect our current
expectations regarding the offering, the intended use of proceeds,
the terms of the Convertible Notes, the capped call transactions,
the 2024 notes repurchases, the Unwind Transactions, the share
repurchases, third parties entering into or unwinding derivative
transactions with respect to Granite’s common stock and/or
purchasing or selling Granite’s common stock, and the potential
impact of the foregoing on dilution to Granite’s stockholders or
the offset of any cash payments Granite is required to make in
excess of the principal amount of converted Convertible Notes, the
market price of Granite’s common stock or the Convertible Notes or
the initial conversion price of the Convertible Notes. 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, our business and operations involve
numerous risks and uncertainties, many of which are beyond our
control, which could result in our expectations not being realized
or otherwise materially affect our business, financial condition,
results of operations, cash flows and liquidity. Such risks and
uncertainties include, but are not limited to, the risks related to
whether Granite will consummate the offering of the Convertible
Notes on the expected terms or at all, the anticipated terms of,
and the effects of entering into, the capped call transactions, the
2024 notes repurchases, the Unwind Transactions, the share
repurchases and third parties entering into or unwinding derivative
transactions with respect to Granite’s common stock and/or
purchasing or selling Granite’s common stock, market and general
conditions, and those described in greater detail in our filings
with the Securities and Exchange Commission, particularly those
described in our Annual Report on Form 10-K and Quarterly Reports
on Form 10-Q.
Due to the inherent risks and uncertainties associated with our
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 news release and, except as required by law; we
undertake no obligation to revise or update any forward-looking
statements for any reason.
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version on businesswire.com: https://www.businesswire.com/news/home/20240606070884/en/
Investors Wenjun Xu, 831-761-7861 Or Media Erin
Kuhlman, 831-768-4111
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