WATSONVILLE, Calif. - Granite Construction Incorporated (NYSE: NYSE:GVA), a civil engineering and construction company, announced today its intention to offer $325 million in convertible senior notes due 2030. The offering is subject to market conditions and other factors. Granite also plans to give initial purchasers an option to buy up to an additional $48.75 million in notes.
Convertible notes are a type of debt that holders can convert into a specified number of shares of the issuing company's stock. These notes will be senior unsecured obligations of Granite, with semi-annual interest payments starting December 15, 2024, and maturing on June 15, 2030. They will be convertible under certain conditions and during specified periods before December 15, 2029, and at any time until two trading days before they mature.
Granite aims to use the net proceeds to pay for capped call transactions, which are designed to reduce potential stock dilution upon conversion of the notes. Part of the proceeds will also go towards repurchasing some of Granite's 2.75% convertible senior notes due in 2024 and up to $15 million of common stock. Additionally, funds will be allocated to repay amounts under its term loan and for general corporate purposes, which may include acquisitions.
Concurrently with the notes' pricing, Granite plans to negotiate repurchases of its 2024 notes and enter into capped call transactions to cover the number of shares initially underlying the new convertible notes. These transactions may affect the market price of Granite's common stock and the initial conversion price of the notes.
The notes will be offered privately and are not registered under the Securities Act of 1933, meaning they will be available only to qualified institutional buyers. This press release does not constitute an offer to sell the notes or solicitation of an offer to buy them.
The forward-looking statements in the press release are based on management's current expectations and are subject to risks and uncertainties that could cause actual results to differ materially. These include the completion of the offering, market conditions, and the effects of the capped call transactions and note repurchases.
This news article is based on a press release statement from Granite Construction Incorporated.
In other recent news, Granite Construction Incorporated revealed a robust start to 2024 in their first-quarter earnings call, noting significant growth in their construction and materials segments. The company's construction revenue saw an 18% increase from the previous year, while the materials segment's revenue jumped by $20 million to reach $77 million. These positive figures are attributed to an uptick in committed and awarded projects and favorable weather conditions.
Concurrently, Granite has secured several major contracts, including a $48 million eco-friendly project in Washington, an $89 million subcontract for a transformation project at Houston Airport, and a $25 million infrastructure retrofit at Ontario International Airport. These projects, set to begin in 2024, are expected to further bolster the company's revenue and diversify its portfolio.
In addition to these developments, Granite announced a leadership transition with the retirement of CFO Lisa Curtis effective September 16, 2024. Staci Woolsey, currently serving as Chief Accounting Officer, will succeed Curtis, overseeing all global financial functions of the company.
These recent developments reflect Granite's strategic focus on diversification and growth in the construction sector. As the company continues to secure significant contracts and deliver on its commitments, it remains a prominent player in the industry.
InvestingPro Insights
As Granite Construction Incorporated (NYSE: GVA) navigates the financial markets with its $325 million convertible senior notes offering, investors are closely monitoring the company's performance metrics and market position. According to recent data from InvestingPro, Granite Construction boasts a market capitalization of $2.65 billion, reflecting the company's substantial size within the civil engineering and construction sector. With a Price/Earnings (P/E) Ratio of 73.22, the company is trading at a high earnings multiple, which might suggest investor confidence in its future growth prospects or a premium for its industry position.
InvestingPro Tips indicate that Granite Construction is expected to see net income growth this year, a positive sign for potential investors considering the convertible notes offering. Additionally, the company's stock has been characterized by low price volatility, which could appeal to investors looking for stability in their portfolio. It's also noteworthy that Granite has maintained dividend payments for an impressive 35 consecutive years, demonstrating a commitment to returning value to shareholders. For those interested in further analysis, InvestingPro offers additional tips on Granite Construction, and by using the coupon code PRONEWS24, readers can get an extra 10% off a yearly or biyearly Pro and Pro+ subscription.
Other key financial metrics include a Gross Profit Margin of 11.55% over the last twelve months as of Q1 2024, and a Revenue Growth of 20.03% in Q1 2024, indicating the company's ability to increase its earnings. These figures, coupled with a solid track record of dividend payments, provide a comprehensive picture of Granite's financial health as it seeks to expand its financial strategies through the convertible notes offering.
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