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ITEM 1.01
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ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
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On December 8, 2022, Boston Omaha Corporation (the “Company”), entered into an at-the-market equity offering program (the “ATM Program”) pursuant to a Sales Agreement (the “Sales Agreement”) by and between the Company and Wells Fargo Securities, LLC ( “Wells Fargo Securities”). This ATM Program is consistent with the Company’s historical practice of having available to management the option to issue stock from time to time in order to continue to fund the growth of its fiber to the home broadband business, acquire additional billboards, and make other such investments in assets as needed to seek to grow intrinsic value per share. Boston Omaha's general preference is always to have options available to it from a capital allocation perspective which includes, but is not limited to, having a regularly filed ATM program.
Pursuant to the terms of the Sales Agreement, the Company may sell, from time to time, shares (collectively, the “Placement Shares”) of the Company’s Class A Common Stock, par value $0.001 per share (the “Class A Common Stock”), with an aggregate sales price of up to $100,000,000 through Wells Fargo Securities, in transactions that are deemed to be “at-the-market” offerings as defined in Rule 415 of the Securities Act of 1933, as amended (the “Securities Act”).
Upon delivery of a placement notice (a “Placement Notice”) and upon the terms and subject to the conditions of the Sales Agreement, Wells Fargo Securities will use reasonable efforts consistent with its normal trading and sales practices, applicable laws and the rules of the New York Stock Exchange (“NYSE”) to sell the Placement Shares from time to time based upon the Company’s instructions for the sales, including price, time or size limits specified, and otherwise in accordance with, the terms of such Placement Notice. Pursuant to the Sales Agreement, Wells Fargo Securities may sell Placement Shares by any method permitted by law deemed to be an “at the market” offering as defined in Rule 415 of the Securities Act, including without limitation sales made through the NYSE or on any other existing trading market for the Class A Common Stock. Notwithstanding the foregoing, Wells Fargo Securities may not purchase Placement Shares for its own account as principal unless expressly authorized to do so by the Company.
The Company intends to use the net proceeds from the offering, after deducting Wells Fargo Securities’ commissions and the Company’s offering expenses, for general corporate purposes, which may include financing its existing businesses and operations, and expanding its businesses and operations through additional acquisitions and minority investments and additional hires. Such expansion may include future billboard acquisitions, broadband acquisitions, acquisitions of surety insurance companies and other growth of the Company's insurance activities, additional investments in real estate management, homebuilding and other real estate service businesses, additional investments in subprime automobile lending, and acquisitions of other businesses. The Company has not determined the amount of net proceeds to be used for any specific purpose, and management will retain broad discretion over the allocation of net proceeds. While the Company has no current agreements, commitments or understandings for any specific acquisitions at this time, it may use a portion of the net proceeds for these purposes.
For sales of Placement Shares through Wells Fargo Securities, the Company will pay Wells Fargo Securities a commission at a mutually agreed rate of 3% of the gross sales price per Placement Share. In addition, the Company has agreed to pay certain expenses incurred by Wells Fargo Securities in connection with the offering. The Company has no obligation to sell any shares under the Sales Agreement, and may at any time suspend the offering of Placement Shares under the Sales Agreement.
The Sales Agreement contains customary representations and warranties of the parties and indemnification and contribution provisions under which the Company and Wells Fargo Securities have agreed to indemnify each other against certain liabilities, including liabilities under the Securities Act. The ATM Program pursuant to the Sales Agreement will automatically terminate upon the issuance and sale of all of the Placement Shares through Wells Fargo Securities.
The Placement Shares will be offered and sold pursuant to a shelf registration statement on Form S-3 (File No. 333-264470), which was initially filed with the Securities and Exchange Commission (the "SEC") on April 25, 2022 and declared effective by the SEC on May 11, 2022, and a related prospectus supplement, dated December 8, 2022.
The foregoing description of the Sales Agreement is not complete and is qualified in its entirety by reference to the full text of such agreement, a copy of which is filed herewith as Exhibit 1.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The legal opinion of Gennari Aronson, LLP relating to the Placement Shares is filed as Exhibit 5.1 to this Current Report on Form 8-K.
The Sales Agent and affiliates of the Sales Agent have from time to time performed, and may in the future perform, various financial advisory, commercial banking and investment banking services for the Company and for its affiliates in the ordinary course of business for which they have received and would receive customary compensation.
This Current Report on Form 8-K shall not constitute an offer to sell or the solicitation of an offer to buy any security nor shall there be any sale of these securities in any state in which such offer, solicitation or sales would be unlawful prior to registration or qualification under the securities laws of any such state.