H2O America Announces \$550 Million Public Offering with Forward Sale Component

Key Highlights for Investors

• Offering Size: H2O America (NASDAQ: HTO) has launched an underwritten public offering of \$550 million in common stock, subject to market and other conditions.
• Offering Structure: Of the \$550 million, approximately \$150 million in shares will be issued and sold directly by the company, while \$400 million in shares will be sold by forward purchasers (JPMorgan Chase Bank, N.A., and Wells Fargo Bank, N.A., or their affiliates) through forward sale agreements.
• Forward Sale Agreements: These agreements allow the company to physically settle up to \$400 million in shares at a forward price equal to the offering price, with settlement dates at H2O America’s discretion up to March 2, 2028. The company retains the right to elect cash or net share settlement.
• Underwriter Option: The company will grant underwriters a 30-day option to purchase up to an additional \$82.5 million in shares at the offering price, potentially increasing the total offering size.
• Intended Use of Proceeds: The net proceeds from this offering, together with new debt financing, are intended to help fund the acquisition of Quadvest, as well as to cover related fees and general corporate purposes, including other acquisitions, capital expenditures, share repurchases, or debt repayment.
• Conditionality: Importantly, the completion of the offering is NOT contingent on the closing of the Quadvest acquisition or any future debt financing. If the Quadvest deal does not close, proceeds may be used for other corporate purposes.
• Joint Book-Running Managers: J.P. Morgan and Wells Fargo Securities are acting as joint book-running managers and representatives of the underwriters.
• Regulatory Filing: The offering is being conducted under an effective shelf registration statement filed with the SEC.

Details for Shareholders and Price-Sensitive Insights

Shareholder Impact:
This is a significant capital raise that could affect the company’s share price due to:

• Dilution Risk: The issuance of up to \$550 million (or \$632.5 million if the over-allotment option is exercised in full) in new shares will dilute existing shareholders’ stakes.
• Strategic Investment: The use of proceeds is primarily to finance the acquisition of Quadvest, which, if successful, could enhance the company’s growth prospects and future earnings. However, if the deal falls through, the capital will boost the company’s balance sheet for other uses, potentially supporting future M&A or shareholder returns.
• Forward Sale Uncertainty: The forward sale agreements introduce some uncertainty regarding the timing and impact of share issuance, as the company can choose when to settle up to March 2028, affecting future supply of shares.
• Not Conditional on Acquisition: The fact that the offering is not conditional on the Quadvest acquisition or debt financing means the company could have a large cash balance if the deal does not close, which may or may not be deployed productively.

About H2O America

H2O America is a national investor-owned network of local water and wastewater utilities, currently serving more than 1.6 million people across the U.S. through Connecticut Water, Maine Water, San Jose Water, and Texas Water. The company manages approximately 409,000 service connections and is focused on infrastructure investment, operational excellence, and long-term sustainable value.

Forward-Looking Statements and Risks

The announcement contains forward-looking statements regarding the offering, the Quadvest acquisition, and expected use of proceeds. There are notable risks and uncertainties, including:

• Risk that the Quadvest acquisition may not close on the anticipated timeline, or at all.
• Regulatory risks, particularly in water and utility sectors, and environmental policies (including PFAS regulation).
• Exposure to economic, weather, climate, operational, and catastrophic event risks.
• Ability to secure favorable debt financing.
• Potential impact of dilution and timing of forward sales on the share price.

Investor Contacts

• Ann P. Kelly, Chief Financial Officer and Treasurer
  Phone: (408) 385-4752
  Email: [email protected]
• Jonathan G. Reeder, Senior Director of Treasury & Investor Relations
  Phone: (475) 414-1034
  Email: [email protected]

Disclaimer

This article is intended for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities. Investors should read the preliminary and final prospectus supplements and review SEC filings before making investment decisions. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated. The company undertakes no obligation to update forward-looking statements as a result of new information or future events.

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