GRANITE CONSTRUCTION INC 8-K

What Happened
Granite Construction Incorporated closed a private offering on June 2, 2026 of $600.0 million aggregate principal amount of 6.375% senior notes due June 15, 2034. The company estimates net proceeds of about $590.0 million and says it will use those proceeds, together with cash on hand and any payments from counterparties to capped call transactions, to redeem all outstanding 3.75% Convertible Senior Notes due 2028 and to settle conversions related to those 2028 Notes. The new notes are senior unsecured obligations and are guaranteed on a senior unsecured basis by the company’s domestic subsidiaries that are borrowers/guarantors under its credit facility.

Key Details

• Offering closed June 2, 2026: $600.0M principal; interest rate 6.375% per year, paid semiannually (June 15 & Dec 15), first payment Dec 15, 2026; maturity June 15, 2034.
• Net proceeds estimated at ~ $590.0M after discounts and fees; sale was private (Rule 144A and Regulation S) and notes are unregistered.
• Company previously called the $273.7M 2028 Notes (call notice May 19, 2026) for redemption on August 10, 2026 and elected a cash-heavy conversion settlement to limit shareholder dilution.
• As a result of the conversion election and share price appreciation since issuance, Granite estimates a bifurcated derivative liability of approximately $500M that will be recorded and remeasured (impacting GAAP results) as of the call date and through settlement.

Why It Matters
This transaction replaces the convertible 2028 debt with plain-vanilla senior notes, reducing potential future stock dilution by enabling cash settlements of conversions. However, the company expects a large non-cash GAAP charge (the estimated ~$500M derivative liability) as the conversion feature will be bifurcated and marked to market; Granite says this charge will be recognized in results through settlement but does not represent incremental cash beyond the planned cash settlements. The new 6.375% notes increase fixed interest obligations and change the company’s debt mix; Granite also intends to exclude the redemption/conversion impacts (and related tax effects) from its non-GAAP measures such as adjusted EBITDA. All preliminary accounting estimates remain subject to completion and may change.