Granite Construction to Offer $325M in Convertible Senior Notes

Granite Construction Incorporated (NYSE: GVA) has announced its intention to offer $325 million of convertible senior notes due 2030. The notes will bear interest payable semi-annually and will mature on June 15, 2030. Prior to December 15, 2029, the notes will be convertible at the option of the holders only upon the occurrence of certain events and during certain periods.

Granite plans to use a portion of the net proceeds from the offering to pay the cost of entering into capped call transactions in connection with the convertible notes. Additionally, a portion of the net proceeds will be used to repurchase a portion of its outstanding 2.75% convertible senior notes due 2024 (the “2024 notes”). The company also intends to use a portion of the net proceeds for general corporate purposes, including acquisitions.

Concurrently with the pricing of the offering of the convertible notes, Granite expects to enter into one or more separate transactions to repurchase a portion of the outstanding 2024 notes for cash on negotiated terms. The company expects that holders of the 2024 notes may enter into or unwind various derivative transactions with respect to Granite’s common stock and/or purchase or sell shares of the company’s common stock concurrently with or shortly after the pricing of the convertible notes offering.

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. These transactions are expected 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.

The convertible notes will be offered through a private placement and have not been registered under the Securities Act of 1933. As a result, neither the convertible notes nor any common stock issuable upon conversion of the 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.

Granite's proposed offering of convertible senior notes due 2030 demonstrates the company's strategic approach to capital structure and financial management as it seeks to optimize its funding and pursue growth opportunities. Today the company's shares have moved -1.3% to a price of $59.16. If you want to know more, read the company's complete 8-K report here.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.