On February 10, 2022, Phillips Edison & Company, Inc. (the “Company”) and Phillip Edison Grocery Center Operating Partnership I, L.P. (the “Operating Partnership”) entered into a sales agreement (the “sales agreement”) with Morgan Stanley & Co. LLC, BMO Capital Markets Corp., BofA Securities, Inc., BTIG, LLC, Capital One Securities, Inc., CIBC World Markets Corp., Citigroup Global Markets Inc., Fifth Third Securities, Inc., Goldman Sachs & Co. LLC, Jefferies LLC, J.P. Morgan Securities LLC, KeyBanc Capital Markets Inc., Mizuho Securities USA LLC, Regions Securities LLC and Wells Fargo Securities, LLC, as sales agents, forward sellers and/or principals (in any such capacity, collectively, the “Agents”), and the Forward Purchasers (as defined below), relating to the offer and sale of shares of the Company’s common stock, $0.01 par value per share (“common stock”), pursuant to a continuous offering program. In accordance with the terms of the sales agreement, the Company may offer and sell shares of common stock having an aggregate offering price of up to $250.0 million (the “Shares”) from time to time through the Agents in their capacity as sales agents, Forward Sellers (as defined below) or as principals.
Sales of the Shares, if any, may be made by means of ordinary brokers’ transactions on the Nasdaq Global Select Market (“Nasdaq”), in negotiated transactions or in transactions that are deemed to be “at-the-market” offerings as defined in Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”), including sales made to or through a market maker other than on an exchange, in block transactions or by any other method permitted by law, at market prices prevailing at the time of sale, at prices related to prevailing market prices or at negotiated prices, subject to certain minimum prices. The applicable Agent, as sales agent or as Forward Seller, as applicable, will use its commercially reasonable efforts consistent with its normal trading and sales practices to solicit offers to purchase Shares, under the terms and subject to the conditions set forth in the sales agreement. The Company or any of the Agents may suspend the offering at any time upon proper notice and subject to other conditions.
The Company also may sell Shares to each of the Agents, as principal for its own account, at a price to be agreed upon at the time of sale. If the Company sells Shares to any of the Agents as principal, it will enter into a separate terms agreement with such Agent, and it will describe the terms agreement in a separate prospectus supplement or pricing supplement.
The Company will pay each of the Agents acting as its sales agent a commission that will not exceed, but may be lower than, 2.0% of the gross sales price per share of Shares sold through it as sales agent under the sales agreement. The compensation to each Agent acting as a Forward Seller will be a mutually agreed commission in the form of a reduction to the initial forward price under the related forward sale agreement that will not exceed, but may be lower than, 2.0% of the gross sales price of the borrowed shares sold through such Agent, acting as Forward Seller, during the applicable forward hedge selling period for such shares (which gross sales price will be adjusted for daily accruals based on a floating interest rate and specified amounts related to expected dividends on shares of common stock if an “ex-dividend” date occurs during such forward hedge selling period).
None of the Agents, whether acting as sales agent or as Forward Seller, is required to sell any specific number or dollar amount of Shares but each will use its commercially reasonable efforts, as the Company’s sales agent or Forward Seller, as applicable, and subject to the terms of the sales agreement, to sell the Shares offered as instructed by the Company (if acting as the Company’s sales agent) and all the shares borrowed by the relevant Forward Purchaser pursuant to the sales agreement (if acting as Forward Seller). The offering of the Shares pursuant to the sales agreement will terminate upon the earlier of (1) the sale of all the Shares subject to the sales agreement (including Shares sold by the Company to or through the Agents and borrowed shares sold through the Agents, acting as Forward Sellers) or (2) termination of the sales agreement in accordance with its terms.
The sales agreement contemplates that, in addition to the issuance and sale by the Company of Shares to or through the Agents as sales agents, the Company may enter into separate forward sale agreements (each, together with any related pricing supplement, a “forward sale agreement,” and, collectively, the “forward sale agreements”), with any of, respectively, Morgan Stanley & Co. LLC, Bank of America, N.A., Bank of Montreal, Canadian Imperial Bank of Commerce, Citibank, N.A., Goldman Sachs & Co. LLC, Jefferies LLC, JPMorgan Chase Bank, National Association, KeyBanc Capital Markets Inc., Mizuho Markets Americas LLC, Regions Securities LLC and Wells Fargo Bank, National Association, or one of their respective affiliates (in such capacity, each, a “Forward Purchaser,” and, collectively, the “Forward Purchasers”). If the Company enters into a forward sale agreement with any Forward Purchaser, it expects that such Forward Purchaser, acting in accordance with the mutually accepted instructions related to such forward sale agreement, will attempt to borrow and sell, through the relevant Agent, acting as agent for such Forward Purchaser, shares of common stock to hedge such Forward Purchaser’s exposure under such forward sale agreement. The Company refers to an Agent, when acting as sales agent for the relevant Forward Purchaser, as, individually, a “Forward Seller,” and, collectively, the “Forward Sellers.” Each Forward Purchaser will be either one of the Agents named in the first sentence of this paragraph or an affiliate of one of those Agents and, unless otherwise expressly stated or the context otherwise requires, references herein to the “relevant” Forward Purchaser mean, with respect to any Agent, the affiliate of such Agent that is acting as Forward Purchaser or, if applicable, such Agent acting in its capacity as Forward Purchaser. The Company will not initially receive any proceeds from any sale of shares of common stock borrowed by a Forward Purchaser and sold through a Forward Seller.
The Company currently expects to fully physically settle each forward sale agreement, if any, with the relevant Forward Purchaser on one or more dates specified by the Company on or prior to the maturity date of such forward sale agreement. If the Company elects to cash settle any forward sale agreement, it may not receive any proceeds and it may owe cash to the relevant Forward Purchaser. If the Company elects to net share settle any forward sale agreement, it will not receive any proceeds, and it may owe Shares to the relevant Forward Purchaser.
The Company intends to contribute the net proceeds from any sales of the Shares to or through the Agents and the net cash proceeds from the settlement of any forward sale agreement to the Operating Partnership, which will subsequently use the net proceeds received from the Company to temporarily repay borrowings outstanding under the Company’s revolving credit facility, fund external growth with property acquisitions and fund other general corporate purposes, including potentially for the repayment of other debt or the repurchase, redemption, or retirement of outstanding debt securities, or a combination of the foregoing.
