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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 1, 2023
KBR, Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 001-33146 | 20-4536774 | ||||||||||||
| (State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||||||||
| 601 Jefferson Street | ||||||||||||||
| Suite 3400 | ||||||||||||||
| Houston, | Texas | 77002 | ||||||||||||
| (Address of principal executive offices) | ||||||||||||||
Registrant’s telephone number including area code: (713) 753-2000
| Title of each class | Trading symbol | Name of each exchange on which listed | ||||||||
| Common Stock, $0.001 par value | KBR | New York Stock Exchange | ||||||||
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 8.01 | Other Events |
2023 Note Repurchase
On June 1, 2023, KBR, Inc. (the “Company”) entered into separate, privately negotiated transactions with certain holders of its outstanding 2.50% Convertible Senior Notes due 2023 (the “2023 Notes”), pursuant to which the Company will repurchase approximately $100 million aggregate principal amount of the 2023 Notes (the “2023 Note Repurchases”). The price that the Company pays for the 2023 Note Repurchases will be based on the volume-weighted average price of the Company’s common stock, par value $0.001 per share (the “Common Stock”), during a ten-trading day measurement period ending on June 15, 2023. Calculated on the basis of the Common Stock’s closing price on the New York Stock Exchange on June 1, 2023, the aggregate repurchase price for the 2023 Notes would have been approximately $236 million. The actual price for the 2023 Note Repurchases will depend on the volume-weighted average price of the Common Stock during the agreed-upon measurement period.
The 2023 Note Repurchases are expected to close on or about June 16, 2023. The Company will cancel the repurchased 2023 Notes. Following the closing of the 2023 Note Repurchases, approximately $250 million in aggregate principal amount of 2023 Notes will remain outstanding, with terms unchanged.
Bond Hedge and Warrant Unwind Transactions
In connection with the 2023 Note Repurchases, the Company also entered into agreements with certain financial institutions (the “Option Counterparties”) to terminate corresponding portions of the convertible note hedge and warrant transactions the Company previously entered into with the Option Counterparties in connection with the issuance of the 2023 Notes. The respective unwind agreements provide for a payment by each Option Counterparty to the Company in respect of the convertible note hedge transactions, and by the Company to each Option Counterparty in respect of the warrant transactions, as applicable, in cash in an amount based on the volume-weighted average price for the Common Stock. In connection with such terminations, the Company anticipates that it will receive net proceeds from the Option Counterparties equal to approximately $48 million in aggregate, calculated on the basis of the Common Stock's closing price on the New York Stock Exchange on June 1, 2023, with the exact amount to be determined based on the volume-weighted average price of the Common Stock during the agreed-upon measurement period. In addition, the Company has amended the warrant transaction agreements with each of the Option Counterparties to provide that the Company may, at its option, elect cash settlement. Except as described herein, the portions of the convertible note hedge and warrant transactions not being terminated will remain outstanding and otherwise continue in accordance with their terms.
A copy of the Company’s press release announcing the transactions described above is filed herewith as Exhibit 99.1 and is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
| (d) | Exhibits | |||||||
| 99.1 | KBR, Inc. press release dated June 2, 2023, titled, “KBR Announces Agreements to Repurchase $100 Million Principal Amount of its $350 Million 2.50% Convertible Senior Notes Due November 1, 2023.” | |||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |||||||
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| KBR, INC. | ||||||||
| June 2, 2023 | /s/ Sonia Galindo | |||||||
| Sonia Galindo | ||||||||
| Executive Vice President, General Counsel & Corporate Secretary | ||||||||
Exhibit 99.1
KBR Announces Agreements to Repurchase $100 Million Principal Amount of its $350 Million 2.50% Convertible Senior Notes Due November 1, 2023
| · | KBR will also terminate a proportionate amount of convertible note hedges and warrants |
| · | Transaction de-risks higher cost of the convertible bond maturity in the event of continued stock price appreciation |
HOUSTON – June 2,
2023 – KBR (NYSE: KBR) announced today that it has entered into separate, privately negotiated agreements to repurchase $100 million
principal amount of its outstanding $350 million, 2.50% Convertible Senior Notes due 2023 (the “Notes”) from certain holders
of the Notes. In connection with the Note repurchases, KBR also entered into partial unwind agreements with Bank of America, N.A., BNP
Paribas and Citibank, N.A. (collectively, the “Counterparties”) to terminate the corresponding portions of the convertible
note hedge and warrant transactions KBR previously entered into with the Counterparties in connection with the issuance of the Notes.
The transactions will result in a net outflow of roughly $188 million, subject to share price volatility as discussed below, and will
contain the cost of this proportion of the ultimate Notes maturity in November 2023. Following the closing of the repurchases, $250 million
in aggregate principal amount of Notes will remain outstanding, with terms unchanged.
“Back in February, we made the commitment to resolve the maturity of the convertible notes with minimal dilution to our shareholders. With strong Q1 performance and an excellent balance sheet position, the early termination de-risks potentially higher costs of resolving the maturity later in the year as our performance momentum continues.” said Stuart Bradie, KBR president and CEO. “Being proactive and committed to improving our capital structure as we progress through 2023 opens the door for continued balanced capital deployment and shareholder value appreciation opportunities in the years ahead.”
The price that KBR pays for the repurchase of the Notes and the amount it receives on early termination of the hedge and warrant transactions will be based on the volume-weighted average price of KBR’s common stock during the agreed upon measurement periods. Based on the closing price of KBR’s common stock on June 1, 2023, the estimated net outlay for the transactions would be $188 million.
In addition, for the portion of the warrants that remain outstanding after the early termination, KBR has amended the warrant transaction agreements with each of the Counterparties to allow KBR to elect, at its option, cash settlement. Except as described herein, the portions of the convertible note hedge and warrant transactions not being terminated will remain outstanding and otherwise continue in accordance with their terms.
This press release does not constitute an offer to purchase or sell or the solicitation of an offer to sell or purchase any security.
About KBR
We deliver science, technology and engineering solutions to governments and companies around the world. KBR employs approximately 32,000 people performing diverse, complex and mission-critical roles in 33 countries.
KBR is proud to work with its customers across the globe to provide technology, value-added services, and long-term operations and maintenance services to ensure consistent delivery with predictable results. At KBR, We Deliver.
Visit www.kbr.com
Forward Looking Statements
The statements in this press release that are not historical statements, including statements regarding future financial performance, the closing of the transactions described above, the company’s stock price, the final amounts of the related payments and the company’s capital structure, are forward-looking statements within the meaning of the federal securities laws. These statements are subject to numerous risks, uncertainties and assumptions, many of which are beyond the company’s control, that could cause actual results to differ materially from the results expressed or implied by the statements. These risks, uncertainties and assumptions include, but are not limited to, those set forth in the company's most recently filed Annual Report on Form 10-K, any subsequent Form 10-Qs and 8-Ks and other U.S. Securities and Exchange Commission filings, which discuss some of the important risks, uncertainties and assumptions that the company has identified that may affect its business, results of operations and financial condition. Due to such risks, uncertainties and assumptions, you are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof. Except as required by law, the company undertakes no obligation to revise or update publicly any forward-looking statements for any reason.
For further information, please contact:
Investors
Jamie DuBray
Vice President, Investor Relations
713-753-5082
Investors@kbr.com
Media
Philip Ivy
Vice President, Global Communications and Marketing
713-753-3800
MediaRelations@kbr.com