Granite
Construction

Granite Construction is one of the largest diversified construction and construction materials companies in the United States.

Transaction Terms

Offering Size

$373.75MM ($325MM Base + $48.75MM Greenshoe)

Security

3.75% Convertible Senior Notes

Maturity

2028 (5 Years)

Conversion Premium

30%

Capped Call

Up 125%

Use of Proceeds

Repurchase $199MM principal amount of 2.75% convertible senior notes due 2024; repay credit facility

Execution

144A, wall-crossed, overnight

Situation Overview

Efficient overnight
convertible refinancing

In 2019, Granite issued a $230MM convertible bond hedged with a call spread to refinance its credit facility. The stock had appreciated approximately 50% and Granite sought to refinance before the bonds became current liabilities.

The challenge was executing a large refinancing without exposing the stock to selling pressure that typically accompanies a publicly marketed convertible offering.

HudsonWest’s Role

Eliminating market
risk entirely

Eliminating Public Marketing Risk

HudsonWest helped design a refinancing strategy that eliminated public marketing and any stock price risk by leveraging hedging dynamics and targeting a balanced investor base.

Wall-Cross Process

HudsonWest partnered with Granite's bank group to conduct a wall-cross process of the top 2024 holders, helping negotiate the new issue and repurchase on company-friendly terms.

Capped Call Auction

HudsonWest led an efficient capped call auction to hedge the conversion price up 125% to above then all-time highs, resulting in substantial savings.

Call Spread Unwind

HudsonWest also negotiated the existing call spread unwind to maximize hedging efficiency and price and minimize unwind friction.

Outcome

Granite shares closed up nearly 7% following the announcement.

GraniteConstruction

Efficient overnightconvertible refinancing

Eliminating marketrisk entirely

Let's start aconversation.

Granite
Construction

Efficient overnight
convertible refinancing

Eliminating market
risk entirely

Let's start a
conversation.