Receives Commitment from Existing Secured
Lenders for up to $19.5 Million in Debtor-in-Possession
Financing
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.
About Williams
Williams Industrial Services Group has been safely helping plant
owners and operators enhance asset value for more than 50 years.
The Company is 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. Williams’ mission is to be the
preferred provider of construction, maintenance, and specialty
services through commitment to superior safety performance, focus
on innovation, and dedication to delivering unsurpassed value to
its customers.
Additional information about Williams can be found on its
website: www.wisgrp.com.
About EnergySolutions
EnergySolutions offers customers a full range of integrated
services and solutions, including nuclear operations,
characterization, decommissioning, decontamination, site closure,
transportation, nuclear materials management, processing,
recycling, and disposition of nuclear waste, and research and
engineering services across the nuclear fuel cycle. For additional
information about EnergySolutions visit www.energysolutions.com or
contact Mark Walker at mwalker@energysolutions.com or
801-231-9194.
Forward-looking Statement Disclaimer
This press release contains “forward-looking statements” within
the meaning of the term set forth in the Private Securities
Litigation Reform Act of 1995. Forward-looking statements generally
use forward-looking words, such as “may,” “will,” “could,”
“should,” “would,” “project,” “believe,” “anticipate,” “expect,”
“estimate,” “continue,” “potential,” “plan,” “forecast” and other
words that convey the uncertainty of future events or outcomes.
These forward-looking statements are not guarantees of the
Company’s future performance and involve risks, uncertainties,
estimates and assumptions that are difficult to predict and may be
outside of the Company’s control. Therefore, the Company’s actual
outcomes and results may differ materially from those expressed in
or contemplated by the forward-looking statements. Forward-looking
statements include, but are not limited to, information concerning
the following: expectations regarding risks attendant to the
Chapter 11 bankruptcy process, including the Company’s ability to
obtain court approval from the Bankruptcy Court with respect to
motions or other requests made to the Bankruptcy Court throughout
the course of the Chapter 11 process, including with respect to the
asset sale and DIP credit agreements; the Company’s plans to sell
certain assets pursuant to Chapter 11 of the U.S. Bankruptcy Code,
the outcome and timing of such sale, and the Company’s ability to
satisfy closing and other conditions to such sale; the effects of
Chapter 11, including increased legal and other professional costs
necessary to execute the Company’s wind down, on the Company’s
liquidity and results of operations (including the availability of
operating capital during the pendency of Chapter 11); the length of
time that the Company will operate under Chapter 11 protection and
the continued availability of operating capital during the pendency
of Chapter 11; the Company’s ability to continue funding operations
through the Chapter 11 bankruptcy process, and the possibility that
it may be unable to obtain any additional funding as needed; the
Company’s ability to meet its financial obligations during the
Chapter 11 process and to maintain contracts that are critical to
its operations; the Company’s ability to comply with the
restrictions imposed by the terms and conditions of the DIP credit
agreements and other financing arrangements; objections to the
Company’s wind down process, the DIP credit agreements, or other
pleadings filed that could protract Chapter 11; the effects of
Chapter 11 on the interests of various constituents and financial
stakeholders; the effect of the Chapter 11 filings and any
potential asset sale on the Company’s relationships with vendors,
regulatory authorities, employees and other third parties; possible
proceedings that may be brought by third parties in connection with
the Chapter 11 process or the potential asset sale and risks
associated with third-party motions in Chapter 11; the timing or
amount of any distributions, if any, to the Company’s stakeholders;
expectations regarding future performance of assets expected to be
sold in the bankruptcy process; employee attrition and the
Company’s ability to retain senior management and other key
personnel due to the distractions and uncertainties; the impact and
timing of any cost-savings measures and related local law
requirements in various jurisdictions; the impact of litigation and
regulatory proceedings; expectations regarding financial
performance, strategic and operational plans, and other related
matters; and other factors discussed in the Company’s filings with
the U.S. Securities and Exchange Commission, including the “Risk
Factors” section of the Annual Report on Form 10-K for its 2022
fiscal year. Any forward-looking statement speaks only as of the
date of this press release. Except as may be required by applicable
law, the Company undertakes no obligation to publicly update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise, and you are cautioned not
to rely upon them unduly.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230724130488/en/
Brenda Adrian, of Sitrick and Company, at
brenda_adrian@sitrick.com, or Rich Wilner at
rwilner@sitrick.com
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