Item 1.01 Entry into a Material Definitive Agreement.
On November 28, 2018, SJW Group, a Delaware corporation (the “Company”), entered into an underwriting agreement (the “Underwriting Agreement”) with J.P. Morgan Securities LLC, Barclays Capital Inc., RBC Capital Markets, LLC and UBS Securities LLC, as representatives of the several underwriters named therein (the “Underwriters”), pursuant to which the Company agreed to issue and sell to the Underwriters an aggregate of 6,750,000 shares of the Company’s common stock, par value $0.001 per share (the “Firm Shares”), in an underwritten public offering. Pursuant to the Underwriting Agreement, the Company granted the Underwriters a30-day option to purchase up to an additional 1,012,500 shares of its common stock (the “Option Shares”), which was exercised in full on December 3, 2018. The offering of the Firm Shares closed on December 3, 2018 and the offering of the Option Shares is expected to close on December 5, 2018, subject to customary closing conditions.
The Company received net proceeds of approximately $356.7 million from the sale of the Firm Shares and expects to receive additional net proceeds of approximately $53.8 million from the sale of the Option Shares, in each case after deducting the underwriting discounts and commissions and estimated offering expenses payable by the Company. The Company intends to use the net proceeds from the offering, together with the net proceeds from debt financing, to finance the Company’s previously announced acquisition of Connecticut Water Service, Inc. (the “CTWS Acquisition”) and to pay related fees and expenses. Pending such use, the Company may invest the net proceeds temporarily in investment-grade securities, money-market funds, bank deposit accounts or similar short-term investments. The offering is not conditioned on the consummation of the CTWS Acquisition. If for any reason the CTWS Acquisition does not close, then the Company intends to use the net proceeds from the offering for general corporate purposes, which may include acquisitions, share repurchases or debt repayment, and the Company will not have any obligation to repurchase any or all of its shares of common stock sold in the offering.
The Underwriting Agreement includes customary representations, warranties, covenants and closing conditions. It also provides for customary indemnification by the Company and the Underwriters against certain specified types of liabilities and customary contribution provisions in respect of those liabilities. Certain of the Underwriters and their respective affiliates have performed, and may in the future perform, various commercial and investment banking, financial advisory and other services for us, our affiliates and our officers in the ordinary course of business, for which they received, and may receive, customary fees and reimbursement of expenses. In particular, J.P. Morgan Securities LLC is acting as financial advisor to the Company in connection with the CTWS Acquisition. Affiliates of J.P. Morgan Securities LLC, Barclays Capital Inc., RBC Capital Markets, LLC and UBS Securities LLC are also lenders under the Company’s $975.0 million committed bridge facility. In addition, JPMorgan Chase Bank, N.A., an affiliate of J.P. Morgan Securities LLC, acts as lender to San Jose Water Company, a subsidiary of the Company, under San Jose Water Company’s credit agreement dated June 1, 2016.
The offering was made pursuant to the Company’s registration statement on FormS-3 (FileNo. 333-228548) and the prospectus dated November 26, 2018 included in such registration statement, as supplemented by a preliminary prospectus supplement dated November 26, 2018 and a final prospectus supplement dated November 28, 2018, each of which has been filed with the Securities and Exchange Commission.
The foregoing description of the Underwriting Agreement does not purport to be complete and is qualified in its entirety by reference to the Underwriting Agreement, which is filed as Exhibit 1.1 hereto and is incorporated herein by reference. A copy of the opinion of Skadden, Arps, Slate, Meagher & Flom LLP relating to the validity of the common stock being issued and sold in the offering is attached as Exhibit 5.1 hereto.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
Exhibit Index
