Tetra Tech Announces Pricing of $500 Million Offering of Convertible Senior Notes

Tetra Tech, Inc. (NASDAQ: TTEK), a leading provider of high-end consulting and engineering services, announced today the pricing of $500.0 million aggregate principal amount of 2.25% Convertible Senior Notes due 2028 (the “notes”) in a private placement (the “offering”) only to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). Tetra Tech has also granted the initial purchasers of the notes an option to purchase, during a 13-day period beginning on, and including, the date on which the notes are first issued, up to an additional $75.0 million aggregate principal amount of the notes. The sale of the notes to the initial purchasers is expected to close on August 22, 2023, subject to customary closing conditions.

The notes will be general unsecured obligations of Tetra Tech and will accrue interest payable semiannually in arrears on February 15 and August 15 of each year, beginning on February 15, 2024, at a rate of 2.25% per year. The notes will mature on August 15, 2028, unless earlier converted, redeemed or repurchased.

Tetra Tech estimates that the net proceeds to Tetra Tech from the offering will be approximately $487.1 million (or approximately $560.4 million if the initial purchasers exercise their option to purchase additional notes in full) after deducting the initial purchasers’ discounts and commissions and estimated offering expenses payable by Tetra Tech. Tetra Tech expects to use the net proceeds from the offering to pay $45.0 million for the cost of the capped call transactions described below and to repay all $185.0 million principal amount outstanding under its revolving credit facility, the remaining $234.0 million principal amount outstanding under its senior secured term loan due 2027 and approximately $23.1 million principal amount outstanding under its senior secured term loan due 2026 (the “2026 Term Loan”). If the initial purchasers exercise their option to purchase additional notes, Tetra Tech expects to use a portion of the net proceeds from the sale of the additional notes to enter into additional capped call transactions with the option counterparties (as defined below) and to repay additional principal amounts outstanding under the 2026 Term Loan.