8-K: Atlantic Union Bankshares Enters Additional Forward Sale Agreement Following Full Exercise of Underwriters' Option

Atlantic Union Bankshares Corporation has entered into an additional forward sale agreement with Morgan Stanley & Co. LLC for 1,478,873 shares of common stock, following the full exercise of the underwriters' option to purchase additional shares.

Summary

• Atlantic Union Bankshares Corporation (AUB) has entered into an additional forward sale agreement with Morgan Stanley & Co. LLC for 1,478,873 shares of common stock.
• This agreement follows the underwriters' full exercise of their option to purchase additional shares, which was part of a previously announced public offering.
• The terms of the additional forward sale agreement are essentially similar to the original forward sale agreement.
• The initial forward price is set at $34.08 per share, subject to adjustments based on a daily rate and forward price reduction dates.
• The final settlement date for the agreement is April 22, 2026.
• The agreement allows for physical settlement, cash settlement, or net share settlement, at the election of AUB, with physical settlement as the default under certain conditions.

Sentiment

Score: 7

Explanation: The document is generally positive, indicating a successful capital raise through the full exercise of the underwriters' option and the subsequent forward sale agreement. However, the complexity of the agreement and the potential for adjustments introduce some uncertainty.

Positives

• The full exercise of the underwriters' option indicates strong demand for AUB's stock.
• The additional forward sale agreement provides AUB with further capital raising opportunities.
• The agreement provides flexibility with settlement options, allowing AUB to choose between physical, cash, or net share settlement.

Negatives

• The forward price is subject to adjustments, which could potentially reduce the final proceeds for AUB.
• The agreement includes complex settlement terms and conditions, which may require careful management.

Risks

• The forward price is subject to adjustments based on market conditions and interest rates, which could impact the final proceeds.
• The agreement includes various events that could trigger early termination or adjustments, such as stock borrow events, dividend distributions, and market disruptions.
• The settlement method is subject to certain conditions, and physical settlement may be imposed if cash or net share settlement is not viable.

Future Outlook

The document outlines the terms of the additional forward sale agreement, which will be settled by April 22, 2026. The agreement provides flexibility in settlement methods, allowing AUB to manage its capital structure effectively. The forward price is subject to adjustments, which will impact the final proceeds.

Management Comments

• Robert M. Gorman, Executive Vice President and Chief Financial Officer, signed the agreement on behalf of Atlantic Union Bankshares Corporation.

Industry Context

This announcement is typical for financial institutions seeking to manage their capital structure and raise funds through equity offerings. Forward sale agreements are a common tool used in such transactions, allowing companies to lock in a price for their shares while providing flexibility in settlement.

Comparison to Industry Standards

• The use of a forward sale agreement with an underwriter like Morgan Stanley is a standard practice for public companies raising capital.
• The terms of the agreement, including the forward price, settlement options, and adjustment mechanisms, are consistent with similar transactions in the financial industry.
• The inclusion of ISDA (International Swaps and Derivatives Association) definitions and protocols is a common practice in derivative agreements.
• The agreement's complexity and detailed clauses are typical for such financial instruments, reflecting the need to manage various risks and contingencies.

Stakeholder Impact

• Shareholders may see a dilution of their ownership due to the issuance of new shares.
• The company will have additional capital to support its operations and growth.
• The agreement may impact the company's financial statements and key metrics.

Next Steps

• The company will proceed with the settlement of the forward sale agreement, which may involve physical, cash, or net share settlement.
• The company will monitor the forward price and make any necessary adjustments based on market conditions.
• The company will comply with all terms and conditions of the agreement, including reporting and disclosure requirements.

Key Dates

Keywords

forward sale agreement, common stock, underwriting agreement, settlement, Morgan Stanley, Atlantic Union Bankshares, equity derivatives, share forward transaction