STERLING CONSTRUCTION COMPANY, INC. (NASDAQ:STRL) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01
| Entry into a Definitive Material Agreement |
On March 8, 2017, Sterling Construction Company, Inc. (the
Company) entered into a Stock Purchase Agreement (the Purchase
Agreement) with the sellers identified on Exhibit A thereto, Gary
Roger Engasser II, as the sellers representative, and the
principals identified on Exhibit B thereto. to the Purchase
Agreement, the Company has agreed to acquire 100% of the
outstanding stock of Tealstone Residential Concrete, Inc. and
Tealstone Commercial, Inc. (collectively, Tealstone) from the
stockholders thereof (the Sellers) for consideration consisting
of $55,000,000 in cash (less debt outstanding on the closing date
and costs incurred by the Sellers and Tealstone in connection
with the transaction), 1,882,058 shares of the Companys common
stock, and $5,000,000 of promissory notes issued to the Sellers,
all to be paid or issued, as applicable, on the closing date,
along with $2,500,000 and $7,500,000 of deferred cash payments to
be paid on the second and third anniversaries of the closing
date, respectively, and up to an aggregate of $15,000,000 in
earn-out payments payable on the first, second, third and fourth
anniversaries of the closing date. Tealstone focuses on concrete
construction of residential foundations, parking garages, paving,
elevated slabs and other concrete work for leading homebuilders,
multi-family developers and general contractors in both retail
and commercial markets.
The Purchase Agreement contains customary representations and
warranties by the Company and the Sellers. The Sellers and
certain principals of Tealstone have agreed not to compete with
Tealstone or solicit any of Tealstones customers, suppliers or
employees for a period of seven years after the closing date. The
Company and the Sellers have agreed to customary indemnities
relating to breaches of representations, warranties and
covenants, which indemnities, subject to certain exceptions,
survive for two years following the closing date and are subject
to a $7,000,000 cap for breaches of representations and
warranties.
The consummation of the transactions contemplated by the Purchase
Agreement are subject to the satisfaction of customary closing
conditions, including, among other things, the absence of legal
impediments prohibiting the transactions, the expiration or early
termination of any required waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
the performance by the parties of their respective covenants as
set forth in the Purchase Agreement, the accuracy of their
respective representations and warranties as set forth in the
Purchase Agreement, the entry into employment agreements by
certain principals of Tealstone, and the consummation of a
financing by the Company to pay the cash portion of the purchase
price. The transactions contemplated by the Purchase Agreement
are expected to close in April 2017, subject to satisfaction of
the closing conditions.
The foregoing description of the Purchase Agreement is not
complete and is qualified in its entirety by reference to the
full text of the Purchase Agreement, which is filed as Exhibit
2.1 to this Current Report on Form 8-K and is incorporated herein
by reference.
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The Purchase Agreement and the above description of the Purchase
Agreement have been included to provide investors and
securityholders with information regarding the terms of the
Purchase Agreement. They are not intended to provide any other
factual information about the Company, Tealstone or their
respective affiliates. The Purchase Agreement contains
representations and warranties and covenants of each of the
Company and the Sellers made solely for the benefit of the other.
The assertions embodied in those representations and warranties
and the obligations embodied in those covenants are qualified by
information in confidential disclosure schedules that the parties
have exchanged in connection with signing the Purchase Agreement.
The disclosure schedules contain information that modifies,
qualifies and creates exceptions to the representations and
warranties and covenants set forth in the Purchase Agreement.
Moreover, the representations and warranties in the Purchase
Agreement were used for the purpose of allocating risk between
the Company and the Sellers. Accordingly, you should read the
representations and warranties and covenants in the Purchase
Agreement not in isolation but only in conjunction with the other
information about the Company, Tealstone and the Sellers, and any
of their respective subsidiaries or affiliates that the
respective companies include in reports, statements and other
filings they make with the Securities and Exchange Commission.
| Item 2.02 |
Results of Operations and Financial Condition |
On March 9, 2017, the Company issued a press release announcing
financial results for the fourth quarter and fiscal year ended
December 31, 2016. The press release is being furnished with this
Current Report on Form 8-K as Exhibit 99.1 and is hereby
incorporated herein by reference.
The information provided in this Item 2.02 shall not be deemed to
be filed for the purposes of Section 18 of the Securities
Exchange Act of 1934, as amended, nor shall it be incorporated by
reference in any filing made by the Company to the Securities Act
of 1933, as amended, other than to the extent that such filing
incorporates by reference any or all of such information by
express reference thereto.
| Item 8.01 | Other Events |
On March 9, 2017, the Company issued a press release relating to
the Purchase Agreement. A copy of the press release is attached
as Exhibit 99.2 hereto and incorporated herein by reference.
| Item 9.01 | Financial Statements and Exhibits |
(d) Exhibits
| Exhibit | Description |
| 2.1 |
Stock Purchase Agreement, dated as of March 8, 2017, by and among Sterling Construction Company, Inc., the sellers identified on Exhibit A thereto, Gary Roger Engasser II, as sellers representative, and the principals identified on Exhibit B thereto |
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99.1 |
Press release, dated March 9, 2017. |
| 99.2 | Press release, dated March 9, 2017. |
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About STERLING CONSTRUCTION COMPANY, INC. (NASDAQ:STRL)
Sterling Construction Company, Inc. is a heavy civil construction company engaged in the building and reconstruction of transportation and water infrastructure projects in Texas, Utah, Nevada, Arizona, California, Hawaii and other states. The Company’s transportation infrastructure projects include highways, roads, bridges, airfields, ports and light rail. Its water infrastructure projects include water, wastewater and storm drainage systems. The Company operates through heavy civil construction segment. The Company provides its services by using traditional general contracting arrangements, such as lump sum contracts and cost-plus contracts. The Company serves various markets in the United States, including Texas, Utah, Nevada, Arizona, California and Hawaii. The Company’s customers include departments of transportation in various states (DOTs), regional transit authorities, airport authorities, port authorities, water authorities and railroads. STERLING CONSTRUCTION COMPANY, INC. (NASDAQ:STRL) Recent Trading Information
STERLING CONSTRUCTION COMPANY, INC. (NASDAQ:STRL) closed its last trading session 00.00 at 9.19 with 160,452 shares trading hands.