Business Context and Reporting Period
This Form 8-K Current Report, dated May 7, 2021, covers Babcock & Wilcox Enterprises, Inc. (the "Company"), a Delaware corporation. The filing reports the closing of an underwritten public offering of preferred stock and the associated amendments to the Company's capital structure.
Key Financial Metrics and Capital Structure
- Offering Details: The Company issued 4,000,000 shares of 7.75% Series A Cumulative Perpetual Preferred Stock.
- Liquidation Preference: $25.00 per share.
- Dividend Rate: 7.75% per annum (equivalent to $1.9375 per share per year), payable quarterly in arrears.
- First Dividend Payment: Scheduled for June 30, 2021.
- Over-Allotment Option: Underwriters were granted a 30-day option to purchase up to 600,000 additional shares.
- Seniority: The Series A Preferred Stock ranks senior to Common Stock and junior to all existing and future indebtedness.
Material Changes Versus Prior Period
The primary material change is the creation of a new class of perpetual preferred stock. This issuance introduces specific restrictions on the Company's ability to declare or pay dividends on, or purchase, redeem, or acquire shares of its Common Stock or other junior/parity stock. These restrictions apply if the Company fails to declare and pay (or set aside) dividends on the Series A Preferred Stock.
Terms, Outlook, and Risks
- Redemption: The stock is generally not redeemable prior to May 7, 2026, except in the event of a change of control or delisting.
- Conversion: The stock is generally not convertible, except upon a change of control or delisting event.
- Voting Rights: Holders generally have no voting rights. However, if dividends are unpaid for six full quarterly periods, holders gain the right to elect two additional members to the Board of Directors.
- Liquidity: The offering was conducted pursuant to a shelf registration statement (Form S-3) declared effective on April 30, 2021.
Investor Verification Checklist
- Verify the total gross proceeds from the offering by reviewing the final prospectus supplement (Exhibit 99.1).
- Confirm the specific definitions of "change of control" and "delisting event" in the Certificate of Designations (Exhibit 3.1) to understand redemption and conversion triggers.
- Review the Company's current debt obligations to assess the seniority of the new preferred stock relative to existing indebtedness.
- Monitor the Company's cash flow to ensure it can meet the quarterly dividend obligation starting June 30, 2021, to avoid restrictions on common stock dividends.