Guardant Health Inc. filed SEC Form 8-K: Entry into a Material Definitive Agreement
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
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CURRENT REPORT
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| Item 1.01 | Entry into a Material Definitive Agreement |
On February 14, 2025, Guardant Health, Inc. (the “Company”), in connection with the consummation of previously announced privately negotiated exchange agreements (the “Exchange Agreements”) with certain holders of its outstanding 0% Convertible Senior Notes due 2027 (the “2027 Notes”), issued $600 million aggregate principal amount of 1.25% Convertible Senior Notes due 2031 (the “New Notes”) in exchange for the retirement of approximately $659.3 million principal amount of 2027 Notes (the “Transactions”). Following the closing of the Transactions on February 14, 2025 (the “Closing Date”), approximately $490.7 million in aggregate principal amount of 2027 Notes remain outstanding with terms unchanged.
The New Notes were issued pursuant to, and are governed by, an indenture (the “New Notes Indenture”), dated as of the Closing Date, between the Company and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”). Pursuant to the New Notes Indenture, the New Notes are senior unsecured obligations of the Company and will bear interest at a rate of 1.25% per annum, payable semi-annually in arrears on each February 15 and August 15, commencing on August 15, 2025. Special interest may accrue on the New Notes in certain circumstances at a rate per annum not to exceed 0.50% (subject to certain exceptions). The New Notes will mature on February 15, 2031, unless earlier repurchased, redeemed or converted.
Before November 15, 2030, noteholders will have the right to convert their New Notes only upon the occurrence of certain events. From and after November 15, 2030, noteholders may convert their New Notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date. The Company will settle conversions by paying or delivering, as applicable, cash, shares of its common stock or a combination of cash and shares of its common stock, at the Company’s election. The initial conversion rate will be 16.0716 shares of common stock per $1,000 principal amount of Notes, which represents an initial conversion price of approximately $62.22 per share of common stock, which reflects a conversion premium of approximately 35% to the last reported sale price of the Company’s common stock on February 6, 2025. The conversion rate and conversion price will be subject to customary adjustments upon the occurrence of certain events.
The Company may not redeem the New Notes at its option at any time before February 21, 2028. The New Notes will be redeemable, in whole or in part (subject to the “Partial Redemption Limitation” (as defined in the New Notes Indenture)), at the Company’s option at any time, and from time to time, on or after February 21, 2028 and on or before the 25th scheduled trading day immediately before the maturity date, at a cash redemption price equal to the principal amount of the New Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date, but only if the last reported sale price per share of the Company’s common stock exceeds 130% of the conversion price on (i) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice; and (ii) the trading day immediately before the date the Company sends such notice. In addition, calling any New Note for redemption will constitute a Make-Whole Fundamental Change with respect to that New Note, in which case the conversion rate applicable to the conversion of that Note will be increased in certain circumstances if it is converted after it is called for redemption.
The New Notes Indenture provides that, if certain corporate events that constitute a “Fundamental Change” (as defined in the New Notes Indenture) occur, then, subject to a limited exception for certain cash mergers, noteholders may require the Company to repurchase their New Notes at a cash repurchase price equal to the principal amount of the New Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. The definition of Fundamental Change includes certain business combination transactions involving the Company and certain de-listing events with respect to the Company’s common stock.
The New Notes have customary provisions relating to the occurrence of “Events of Default” (as defined in the New Notes Indenture), which include the following: (i) certain payment defaults on the New Notes (which, in the case of a default in the payment of interest on the Notes, will be subject to a 30-day cure period); (ii) the Company’s failure to send certain notices under the New Notes Indenture within specified periods of time; (iii) the Company’s failure to comply with certain covenants in the New Notes Indenture relating to the Company’s ability to consolidate with or merge with or into, or sell, lease or otherwise transfer, in one transaction or a series of transactions, all or substantially all of the assets of the Company and its subsidiaries, taken as a whole, to another person; (iv) a default by the Company in its other obligations or agreements under the New Notes Indenture or the New Notes if such default is not cured or waived within 60 days after notice is given in accordance with the New Notes Indenture; (v) certain defaults by the Company or any of its significant subsidiaries with respect to indebtedness for borrowed money of at least $100,000,000; and (vi) certain events of bankruptcy, insolvency and reorganization involving the Company or any of the Company’s significant subsidiaries.
If an Event of Default involving bankruptcy, insolvency or reorganization events with respect to the Company (and not solely with respect to a significant subsidiary of the Company) occurs, then the principal amount of, and any accrued and unpaid interest on, all of the New Notes then outstanding will immediately become due and payable without any further action or notice by any person. If any other Event of Default occurs and is continuing, then, the Trustee, by notice to the Company, or noteholders of at least 25% of the aggregate principal amount of New Notes then outstanding, by notice to the Company and the Trustee, may declare the principal amount of, and any accrued and unpaid interest on, all of the New Notes then outstanding to become due and payable immediately. However, notwithstanding the foregoing, the Company may elect, at its option, that the sole remedy for an Event of Default relating to certain failures by the Company to comply with certain reporting covenants in the New Notes Indenture consists exclusively of the right of the noteholders to receive special interest on the New Notes for up to 180 days at a specified rate per annum not exceeding 0.50% on the principal amount of the New Notes.
The New Notes were issued pursuant to the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”). The Company is relying on this exemption from registration based in part on representations made by the investors in the New Notes in the Exchange Agreements.
The above description of the New Notes Indenture and the New Notes is a summary and is not complete. A copy of the New Notes Indenture and the form of the New Notes are filed as exhibits 4.1 and 4.2, respectively, to this Current Report on Form 8-K, and the above summary is qualified by reference to the terms of the New Notes Indenture and the New Notes set forth in such exhibits.
This Current Report on Form 8-K does not constitute an offer to sell, nor is it a solicitation of an offer to buy, the New Notes or the Company’s common stock, nor shall there be any sale of the New Notes or the Company’s common stock in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any state or any jurisdiction.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information set forth under Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.
| Item 3.02 | Unregistered Sales of Equity Securities |
The information set forth under Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.
Any shares of the Company’s common stock that may be issued upon conversion of the New Notes will be issued in reliance upon Section 3(a)(9) of the Securities Act as involving an exchange by the Company exclusively with its security holders. Initially, a maximum of 13,017,960 shares of the Company’s common stock may be issued upon conversion of the Notes based on the initial maximum conversion rate of 21.6966 shares of common stock per $1,000 principal amount of Notes, which is subject to customary anti-dilution adjustment provisions.
| Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits.
| Exhibit No. |
Description | |
| 4.1 | Indenture, dated as of February 14, 2025, between Guardant Health, Inc. and U.S. Bank Trust Company, National Association, as Trustee. | |
| 4.2 | Form of 1.25% Convertible Senior Notes due 2031 (included as Exhibit A to Exhibit 4.1). | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| GUARDANT HEALTH, INC. | ||||||
| Date: February 14, 2025 | By: | /s/ Michael Bell | ||||
| Michael Bell | ||||||
| Chief Financial Officer | ||||||
| (Principal Accounting Officer and Principal Financial Officer) | ||||||