ESSENTIAL UTILITIES, INC. Item 1.01 Entry into a Material Definitive Agreement.
On
The Company may in the future sell the Shares in amounts and at times to be determined by the Company from time to time, subject to the terms and conditions of the Sales Agreements, but is not obligated to sell any Shares under the Sales Agreements. No assurances can be given that the Company will sell any Shares under the Sales Agreements or, if it does in the future, as to the price or amount of Shares that it sells or the dates when such sales will take place, except as otherwise provided in the Sales Agreements. The timing and amount of any sales in the future will be determined by a variety of factors considered by the Company.
Subject to the terms and conditions of the Sales Agreements, the Sales Agents,
whether acting as the Company's sales agents or as Forward Sellers, will use
their commercially reasonable efforts, consistent with their normal trading and
sales practices and applicable law and regulations, to sell the Shares that may
be designated by the Company (if acting as the Company's sales agents) and the
Shares borrowed by the relevant Forward Purchasers pursuant to the relevant
Sales Agreements (if acting as Forward Sellers). Sales, if any, of the Shares
made through the Sales Agents, as the Company's sales agents, or as Forward
Sellers pursuant to the Sales Agreements, may be made in "at-the-market"
transactions (as defined in Rule 415 under the Securities Act of 1933, as
amended (the "Securities Act")), including sales made by means of ordinary
brokers' transactions through the facilities of the
Under the terms of the Sales Agreements, the Company also may sell Shares to any Sales Agent as principal for its own account. If the Company sells Shares to any Sales Agent as principal, it will enter into a separate terms agreement (each, a "Terms Agreement", and collectively, the "Terms Agreements") setting forth the terms of such transaction.
The Sales Agreements contemplate that, in addition to the issuance and sale by
the Company of Shares to or through the Sales Agents as the Company's sales
agents or as principals, the Company may enter into separate forward sale
agreements (each, together with any related pricing supplement, a "Forward Sale
Agreement" and collectively, the "Forward Sale Agreements"), with any of
Barclays Bank PLC, Royal Bank of Canada, The Toronto-Dominion Bank and
In no event will the aggregate gross sales price of Shares sold by the Company to or through the Sales Agents, acting as sales agents for the Company or as principals, and by the Forward Purchasers through the Forward Sellers, exceed the Maximum Amount.
The net proceeds the Company will receive from the sale of Shares through a Sales Agent on its behalf pursuant to one or more of the separate Sales Agreements or to a Sales Agent acting as a principal will be the gross proceeds received from such sales less the compensation paid to the Sales Agents and any other costs the Company may incur in issuing and/or selling the Shares; provided, however, that the Company will not initially receive any proceeds from any sale of Shares borrowed by a Forward Purchaser and sold through a Forward Seller. The Company expects to fully physically settle each Forward Sale Agreement, if any, with the relevant Forward Purchaser on one or more dates specified by the Company on or prior to the maturity date of such Forward Sale Agreement, in which case the Company expects to receive, subject to certain adjustments, aggregate net cash proceeds at settlement equal to the number of shares of the Company's common stock underlying such Forward Sale Agreement multiplied by the then-applicable forward price per share. If the Company elects to cash settle any Forward Sale Agreement, the Company may not receive any proceeds and the Company may owe cash (in the case of cash settlement) or shares of its common stock (in the case of net share settlement) to the relevant Forward Purchaser. If the Company elects to net share settle any Forward Sale Agreement, the Company will not receive any cash proceeds, and the Company may owe Shares to the relevant Forward Purchaser.
The compensation to each Sales Agent will be a mutually agreed commission equal to 1.00% of the gross sales price of all the Shares sold through it as the Company's sales agent pursuant to the applicable Sales Agreement. The compensation to each Sales Agent acting as a Forward Seller will be a mutually agreed commission in the form of a reduction to the initial forward price under the related Forward Sale Agreement that will be an effective per Share commission of 1.00% of the volume-weighted average price per Share at which the Shares are sold pursuant to such Forward Sale Agreement.
The Company intends to use the net proceeds from any sales of Shares to or through the Sales Agents (as the Company's sales agents or principals) and the net proceeds, if any, from the settlement of any Forward Sale Agreements for general corporate purposes, including for working capital, capital expenditures, water and wastewater utility acquisitions and repaying outstanding indebtedness.
The Company, any Sales Agent or any Forward Purchaser may at any time suspend an offering of Shares pursuant to the terms of the applicable Sales Agreement. The offering of Shares pursuant to any Sales Agreement will terminate upon the earlier of (i) the sale of the Shares under the Sales Agreements (including Shares sold by the Company to or through the Sales Agents and borrowed Shares sold through the Sales Agents, acting as Forward Sellers) and the Terms Agreements, if any, having an aggregate gross sales price equal to the Maximum Amount and (ii) with respect to a particular Sales Agreement, the termination of such Sales Agreement by the Company or by the applicable Sales Agent or Forward Purchaser as permitted therein.
The above summary is qualified in its entirety by reference to, as applicable, the form of Sales Agreement (which includes as an exhibit thereto the form of Forward Sale Agreement) filed as Exhibit 1.1 hereto, incorporated herein by reference.
The opinion of
Certain of the Sales Agents, Forward Purchasers and their respective affiliates are also lenders and/or agents under the Company's and its subsidiaries' revolving credit facilities and receive customary fees and expenses in connection therewith. To the extent the Company uses proceeds from this offering to repay indebtedness under its or its subsidiaries' revolving credit facilities, such Sales Agents, Forward Purchasers and/or affiliates may receive proceeds from this offering.
Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995, which generally
include words such as "believes," "expects," "estimates," "anticipates,"
"plans," "future," "potential," "probably," "predictions," "intends," "will,"
"continue," "in the event" or the negative of such terms or similar expressions.
The Company can give no assurance that any actual or future results or events
discussed in these statements will be achieved. Any forward-looking statements
represent its views only as of today and should not be relied upon as
representing its views as of any subsequent date. Readers are cautioned that
such forward-looking statements are subject to a variety of risks and
uncertainties that could cause the Company's actual results to differ materially
from the statements contained in this Current Report. There are important
factors that could cause actual results to differ materially from those
expressed or implied by such forward-looking statements including, without
limitation, disruptions in the global economy; financial and workforce impacts
from the COVID-19 pandemic; geopolitical forces; the continuation of the
Company's growth-through-acquisition program; the Company's continued ability to
adapt itself for the future and build value by fully optimizing company assets;
general economic business conditions; the Company's ability to fund needed
infrastructure; housing and customer growth trends; unfavorable weather
conditions; the success of certain cost-containment initiatives; changes in
regulations or regulatory treatment; availability and access to capital; the
cost of capital; disruptions in the credit markets; the success of growth
initiatives; the Company's ability to successfully close municipally owned
systems presently under agreement; the Company's ability to continue to deliver
strong results; the Company's ability to continue to pay its dividend, add
shareholder value and grow earnings; municipalities' willingness to privatize
their water and/or wastewater utilities; the Company's ability to control
expenses and create and maintain efficiencies; the Company's ability to acquire
municipally owned water and wastewater systems listed in its "pipeline"; and
other factors discussed in this Current Report on Form 8-K and in our Annual
Report on Form 10-K, which was filed with the
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits. 1.1 Form of Sales Agreement, datedOctober 14, 2022 , amongEssential Utilities, Inc. and each Sales Agent 5.1 Opinion ofBallard Spahr LLP 23.1 Consent ofBallard Spahr LLP (included as part of Exhibit 5.1) 99.1 Form of Forward Sale Agreement, by and betweenEssential Utilities, Inc. and a Forward Purchaser (included as part of Exhibit 1.1) 104 Cover Page Interactive Data File (formatted in inline XBRL)
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