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Receives Commitment from Existing Secured Lenders for up to $19.5 Million in Debtor-in-Possession Financing
ATLANTA, July 24, 2023 /PRNewswire/ -- Williams Industrial Services Group Inc. (NYSE American: WLMS) (the "Company"), a leading provider of infrastructure related services to blue-chip customers in energy and industrial end markets, including a broad range of construction maintenance, modification, and support services, announced today that it and certain of its subsidiaries have filed voluntary Chapter 11 proceedings in the U.S. Bankruptcy Court for the District of Delaware (the "Bankruptcy Court") and agreed to sell substantially all of the Company and its subsidiaries assets to EnergySolutions for $60 million.
The Transaction
The Company and EnergySolutions, a global provider of energy and industrial services headquartered in Salt Lake City, UT, have entered into a purchase agreement pursuant to which EnergySolutions will acquire substantially all the assets and assume certain ordinary course operating liabilities of the Company and its subsidiaries for $60 million. These assets represent the Company's nuclear, fossil, energy delivery, and paper mill operations, which have continued to perform profitably and have strong prospects for future growth. EnergySolutions is not acquiring the Company's operations connected to its water contracts in Florida and Texas.
Tracy Pagliara, President and CEO of the Company, stated: "Having carefully reviewed all available options, our comprehensive strategic alternatives process has concluded. I am confident that EnergySolutions will be a great owner for the Williams business it is acquiring as we stand on the precipice of a global nuclear renaissance and significant growth in energy and industrial infrastructure services. EnergySolutions is well capitalized and positioned to ensure that Williams' rich history of being a customer-centric services provider will continue. Obviously, the Chapter 11 filing is not the outcome we would have wanted for our stockholders or the stakeholders of our water business, but this difficult decision was necessary to deliver the primary and profitable parts of the Williams business to EnergySolutions as a going concern."
Ken Robuck, President and CEO of EnergySolutions, added, "We are very excited to announce this transaction. This is a strategic move that will allow EnergySolutions to expand our nuclear services offerings to existing nuclear operating plants and, ultimately, to support the nuclear industry's drive to create more clean, carbon-free energy through nuclear plant life extension work and the construction of new technologies. We understand that Williams has been through a difficult time, but we are confident that this acquisition will be a positive for the Williams' businesses we are acquiring. These businesses will gain access to our resources and expertise, and we will gain access to their talented team and proven track record in successfully executing nuclear plant maintenance, modifications and new construction projects. Combined with our nuclear waste, decommissioning and onsite integrated services, this acquisition will nicely complement our existing business lines and provide an excellent platform for future growth and expansion into other sectors of the nuclear industry."
DIP Financing
In order to provide necessary funding during the Chapter 11 proceeding, the Company has received commitments for two debtor-in-possession ("DIP") financing credit agreements with its prepetition lenders. Upon approval by the Bankruptcy Court, the DIP financing agreements are expected to provide the Company with the necessary liquidity to permit the businesses that will be disposed of to operate in the normal course and meet their obligations to their employees, vendors and customers throughout the Chapter 11 proceeding while executing on the sale process of the businesses for which EnergySolutions is the "stalking horse" bidder.
One of the Company's DIP facilities will be a revolving line of credit ("RLOC") which will replace the Company's prepetition RLOC, allowing for continued credit advances based on the Company's collateral contributions up to a maximum availability of $12 million. The second facility is a delayed draw term loan ("DDTL") with the Company's existing term lenders which will provide up to $19.5 million of incremental liquidity following the petition filing.
Chapter 11 Process
The transaction with EnergySolutions is part of a sale process under Section 363 of the Bankruptcy Code in which EnergySolutions is the "stalking horse" bidder, meaning that the purchase agreement between the Company and EnergySolutions contains the terms against which competing offers will be solicited and evaluated during a Chapter 11 auction process. The Company is seeking Bankruptcy Court approval of bidding procedures allowing for the submission of higher or otherwise better offers, and is seeking to consummate a sale by September 30, 2023, subject to Bankruptcy Court approval. The Company will manage the bidding process and evaluate any bids received, in consultation with its advisors and otherwise in accordance with the bidding procedures and oversight by the Bankruptcy Court.
Under the purchase agreement, EnergySolutions will not acquire the Company's operations connected to its water contracts in Florida and Texas. The Company is not currently projecting any return for its stockholders or for certain creditors of the retained water business.
Background to the Chapter 11 Filing and Sale Transaction
The factors that precipitated the Company's Chapter 11 filing and sale process included: the loss of customer contracts in early 2022 that comprised 19% and 20% of the Company's annual revenue and gross profit, respectively, in 2021 and the accompanying loss of $361 million in backlog for 2022 and later years; more than $15 million of operating losses associated with the Company's water operations from 2021 through 2023 year to date; approximately $8 million of start-up costs and operating losses related to the Company's entry into the transmission and distribution market from early 2021 through the first quarter of 2023; and the inability of the Company to convert enough pipeline into revenue and to cut enough costs to overcome these losses and corresponding liquidity challenges.
As previously announced, the Company undertook actions to improve the performance of its business, including an aggressive move to trim operating expenses, the implementation of a plan to shorten collection times on accounts receivable, and an attempt to expand into the transmission and distribution market. However, those moves were insufficient to position the business for profitability.
Williams Industrial Services Group is advised by Thompson Hine LLP and Chipman Brown Cicero & Cole, LLP as its legal advisors, G2 Capital Advisors, LLC as its financial advisor, and Greenhill & Co., LLC as its investment banker.
EnergySolutions is advised by Ropes & Gray LLP as its legal advisors.
For additional information about the cases please visit https://dm.epiq11.com/WilliamsIndustrialServicesGroup.
Posted In: WLMS
