8-KMaterial AgreementsOther EventsExhibits & Filings

American Water Works Company, Inc. 8-K Report, Material Agreement (Apr 16, 2018)

Filed April 16, 2018For Securities:AWK

Summary

American Water Works Company, Inc. (AWK) filed this Form 8-K on April 16, 2018, to report on the completion of a public offering and sale of 2,320,000 shares of its common stock. This offering was facilitated through forward sale agreements with JPMorgan Chase Bank and Wells Fargo Bank, acting as forward purchasers, and an underwriting agreement with J.P. Morgan Securities LLC and Wells Fargo Securities, LLC, as underwriters. The company has entered into these forward sale agreements, which allow for settlement on dates to be determined by American Water on or before April 11, 2019. The initial forward sale price for the shares was set at $79.36 per share, subject to daily adjustments based on the federal funds rate and other specified factors. While American Water currently intends to physically settle these agreements, which would involve issuing new shares, it retains the option for net share or cash settlement. This flexibility allows the company to manage its capital structure and potential dilution based on market conditions and its strategic objectives, including the previously announced acquisition of Pivotal Home Solutions.

Key Highlights

  • 1American Water successfully closed a public offering and sale of 2,320,000 shares of common stock on April 16, 2018.
  • 2The offering was structured using forward sale agreements with JPMorgan Chase Bank and Wells Fargo Bank, entered into on April 11, 2018.
  • 3The initial forward sale price was established at $79.36 per share.
  • 4Settlement of the forward sale agreements is to occur on dates specified by American Water on or before April 11, 2019.
  • 5American Water has the option to settle the agreements through physical issuance of shares, net share settlement, or cash settlement.
  • 6The company currently intends to physically settle the agreements, potentially to help finance the announced acquisition of Pivotal Home Solutions.
  • 7The filing includes key agreements such as the Underwriting Agreement and the Forward Sale Agreements as exhibits.

Frequently Asked Questions

The primary purpose of this 8-K filing was to report the closing of a public offering and sale of 2,320,000 shares of American Water's common stock, which was conducted through forward sale agreements and an underwriting agreement.

Forward sale agreements are contracts where American Water agreed to sell shares of its common stock at a future date, with settlement to occur by April 11, 2019. The initial price is set, but it's subject to adjustments. The company can choose to physically deliver shares, settle with cash, or net share settlement, providing flexibility in how it manages its capital obligations.

The $79.36 per share is the initial price at which American Water agreed to sell its shares under the forward sale agreements. This price is subject to daily adjustments based on factors like the federal funds rate, so the final settlement price could be higher or lower than this initial figure.

This offering involves the sale of new shares, which could increase the total number of outstanding shares. The flexibility in settlement options (physical, cash, or net share) allows American Water to manage the impact on its balance sheet and potential dilution. The proceeds, depending on the settlement method, could be used for general corporate purposes or to support strategic initiatives like the acquisition of Pivotal Home Solutions.