GFL Environmental Announces 14.08M Share Secondary Offering by Selling Stockholders

By alexandreCommunication

GFL Environmental Announces 14.08M Share Secondary Offering by Selling Stockholders

GFL Environmental Inc. is a Canadian waste management company that provides services across Canada and in 23 states in the United States. In June 2019, GFL Environmental completed an initial public offering (IPO), selling 73.3 million shares at US$19 each to raise a total of US$1.39 billion. Now, just over two years later, the company has announced a secondary offering of 14.08 million shares by selling stockholders.

The Secondary Offering

The secondary offering was announced on August 16, 2021. According to the press release, the selling stockholders will receive all proceeds from the offering. The shares are being offered under a shelf registration statement previously filed with the Securities and Exchange Commission (SEC) and are expected to be sold through an over-allotment option granted to the underwriters.

Who are the selling stockholders?

The press release did not name the selling stockholders, but it did state that they are “certain investment funds affiliated with HPS Investment Partners, LLC and Macquarie Infrastructure Partners II.” Neither of these entities are affiliated with GFL Environmental.

Why are the selling stockholders offering shares?

The press release did not provide any information on why the selling stockholders are offering shares. It’s possible that they simply want to liquidate some of their holdings in GFL Environmental or use the proceeds for other purposes.

The Underwriters

The underwriters for the offering are Barclays, BMO Capital Markets, RBC Capital Markets, Scotiabank, TD Securities, and Wells Fargo Securities. The underwriters have been granted an over-allotment option to purchase up to an additional 2.11 million shares at the public offering price, less underwriting discounts and commissions.

What is an over-allotment option?

An over-allotment option (also known as a greenshoe option) is an option granted to the underwriters of an IPO or secondary offering, allowing them to purchase additional shares at the offering price if demand for the shares exceeds expectations. This allows the underwriters to stabilize the share price and support the stock in the days following the offering.

The Impact on GFL Environmental

The secondary offering will not provide any proceeds to GFL Environmental, as all of the shares are being sold by the selling stockholders. However, the offering could have an impact on the company’s stock price. Since the shares being offered are coming from existing shareholders and not the company itself, the offering will not dilute the value of existing shares. However, it does increase the number of shares available for trading on the open market.

What is dilution?

Dilution occurs when a company issues additional shares, which decreases the value of existing shares because earnings and assets are now spread across a larger number of shares. In a secondary offering, dilution would occur if the company itself was selling new shares, but since the selling stockholders are not affiliated with GFL Environmental, there is no dilution.

The GFL Environmental secondary offering of 14.08 million shares by selling stockholders was announced on August 16, 2021. The offering will provide proceeds to the selling stockholders and is being underwritten by six major banks. While the offering will not benefit GFL Environmental directly, it could have an impact on the company’s stock price by increasing the number of shares available for trading.

It remains to be seen why the selling stockholders are offering shares, but it’s possible that they simply want to liquidate some of their holdings or use the proceeds for other purposes. As GFL Environmental continues to grow and expand its operations, it will be interesting to see how the market reacts to news and announcements like this one.