Item 1.01 Entry into a Material Definitive Agreement.
On September 12, 2017, Kratos Defense & Security Solutions, Inc. (the Company) closed its previously announced public offering of common stock (the Offering) in accordance with the terms of an underwriting agreement (the Underwriting Agreement), dated September 7, 2017, by and among the Company, J.P. Morgan Securities LLC and Goldman Sachs & Co, LLC, as representative of the several underwriters named therein (the Underwriters).
Upon the closing of the Offering, the Company sold an aggregate of 16,100,000 shares of common stock to the Underwriters, which amount included 2,100,000 shares of common stock sold pursuant to an option granted to the Underwriters that was exercised in full. The Company received net proceeds from the Offering, after deducting commissions and expenses, of approximately $186.0 million.
The shares of the Companys common stock were offered and sold pursuant to the Companys registration statement on Form S-3ASR (File No. 333-220339) (the Registration Statement), filed with the Securities and Exchange Commission on September 5, 2017, as supplemented by the prospectus supplement, dated September 7, 2017. The Registration Statement became immediately effective pursuant to Rule 462(e) of the Securities Act of 1933, as amended (the Securities Act).
The Company expects to use the net proceeds from this Offering to position the Company for projected growth from new and anticipated increased production on under contract programs and expected to be received new programs and contracts, to reduce its indebtedness in order to reduce its cost of capital and facilitate its long-term strategy, and for general corporate purposes, including potential acquisitions.
The Underwriters and their affiliates have provided, and in the future may continue to provide, various financial advisory, cash management, investment banking, commercial banking and other financial services to the Company in the ordinary course of business for which they have received and will continue to receive customary compensation.
The description of the Underwriting Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Underwriting Agreement, a copy of which is attached hereto as Exhibit 1.1 and the terms of which are incorporated herein by reference. The Underwriting Agreement contains customary representations, warranties and agreements by the Company, customary conditions to closing, indemnification obligations of the Company and the Underwriters, including for liabilities under the Securities Act, other obligations of the parties and termination provisions. The representations, warranties and covenants contained in the Underwriting Agreement are solely for the benefit of the parties to such agreement, and may be subject to limitations agreed upon by the contracting parties.
A copy of the opinion of Paul Hastings LLP relating to the legality of the issuance and sale of the Companys common stock in the Offering is attached as Exhibit 5.1 hereto.
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