Harsco Sells Interest in Brand Energy JV
September 15 2016 - 4:15PM
Harsco Corporation (NYSE:HSC) today announced that it has sold its
26 percent interest in Brand Energy & Infrastructure Services,
Inc. (“Brand”), its joint venture with Clayton, Dubilier & Rice
(“CD&R”), to Brand. The total value realized from the
transaction is approximately $232 million, including the
termination of certain obligations of the Company under the joint
venture arrangement with CD&R. Harsco received cash of
$145 million today with the closing of the transaction, which is
net of satisfying the remaining pension obligations to Brand.
This transaction values Harsco’s interest in Brand at approximately
8.5x 2015 adjusted EBITDA. The Company intends to use the
cash proceeds to reduce outstanding debt. Other significant
benefits to Harsco could include reduced interest costs, increased
flexibility with future financings and the potential usage of a
capital loss carryforward.
“The formation of the Brand JV a few years ago was our first
major step in the transformation of Harsco,” said President and CEO
Nick Grasberger. “Since that time we have valued our
partnership with CD&R and have been pleased with the
performance of the Brand business in a difficult market
environment. The decision to sell our interest in Brand at
this time reflects our desire to further reduce the complexity of
the Harsco portfolio, strengthen our balance sheet and
improve financial flexibility.”
Harsco expects to record a non-cash accounting loss on this
equity investment of approximately $45 million, or a loss of $0.56
per share after tax in the third quarter 2016. This
transaction has no impact on the Company’s 2016 Outlook for
adjusted operating income and free cash flow as disclosed with its
second quarter results on August 4, 2016.
Forward-Looking StatementsThe nature of the
Company's business and the many countries in which it operates
subject it to changing economic, competitive, regulatory and
technological conditions, risks and uncertainties.
In accordance with the "safe harbor" provisions of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, the Company provides the following cautionary
remarks regarding important factors that, among others, could cause
future results to differ materially from the results contemplated
by forward-looking statements, including the expectations and
assumptions expressed or implied herein. Forward-looking
statements contained herein could include, among other things,
statements about management's confidence in and strategies for
performance; expectations for new and existing products,
technologies and opportunities; and expectations regarding growth,
sales, cash flows, and earnings. Forward-looking statements
can be identified by the use of such terms as "may," "could,"
"expect," "anticipate," "intend," "believe," "likely," "estimate,“
“target,” "plan" or other comparable terms.
Factors that could cause actual results to differ, perhaps
materially, from those implied by forward-looking statements
include, but are not limited to: (1) changes in the worldwide
business environment in which the Company operates, including
general economic conditions; (2) changes in currency exchange
rates, interest rates, commodity and fuel costs and capital costs;
(3) changes in the performance of equity and bond markets that
could affect, among other things, the valuation of the assets
in the Company's pension plans and the accounting for pension
assets, liabilities and expenses; (4) changes in governmental laws
and regulations, including environmental, occupational health and
safety, tax and import tariff standards; (5) market and competitive
changes, including pricing pressures, market demand and acceptance
for new products, services and technologies; (6) the
Company's inability or failure to protect its intellectual property
rights from infringement in one or more of the many countries in
which the Company operates; (7) failure to effectively prevent,
detect or recover from breaches in the Company's cybersecurity
infrastructure; (8) unforeseen business disruptions in one or more
of the many countries in which the Company operates due to
political instability, civil disobedience, armed hostilities,
public health issues or other calamities; (9) disruptions
associated with labor disputes and increased operating costs
associated with union organization; (10) the seasonal nature of the
Company's business; (11) the Company's ability to successfully
enter into new contracts and complete new acquisitions or strategic
ventures in the time frame contemplated, or at all; (12) the
integration of the Company's strategic acquisitions; (13) the
amount and timing of repurchases of the Company's common stock, if
any; (14) the prolonged recovery in global financial and credit
markets and economic conditions generally, which could result in
the Company's customers curtailing development projects,
construction, production and capital expenditures, which, in turn,
could reduce the demand for the Company's products and services
and, accordingly, the Company's revenues, margins and
profitability; (15) the outcome of any disputes with customers,
contractors and subcontractors; (16) the financial condition of the
Company's customers, including the ability of customers (especially
those that may be highly leveraged and those with inadequate
liquidity) to maintain their credit availability; (17) the
Company's ability to successfully implement and receive the
expected benefits of cost-reduction and restructuring initiatives,
including the achievement of expected cost savings in the expected
time frame and the ability to reduce its net debt; (18) the ability
to successfully implement the Company's strategic initiatives and
portfolio optimization and the impact of such initiatives, such as
the Harsco Metals & Minerals Segment's Improvement Plan
("Project Orion"); (19) implementation of environmental remediation
matters; (20) risk and uncertainty associated with intangible
assets; (21) the impact of a transaction, if any,
resulting from the Company's determination to explore strategic
options for the separation of the Harsco Metals & Minerals
Segment; and (22) other risk factors listed from time to time in
the Company's SEC reports. A further discussion of these,
along with other potential risk factors, can be found in Part I,
Item 1A, "Risk Factors," of the Company's Annual Report on Form
10-K for the year ended December 31, 2015 and in Part II, Item 1A
“Risk Factors”, of the Company’s Quarterly Report on Form 10-Q for
the period ended June 30, 2016. The Company cautions that
these factors may not be exhaustive and that many of these factors
are beyond the Company's ability to control or predict.
Accordingly, forward-looking statements should not be relied
upon as a prediction of actual results. The Company
undertakes no duty to update forward-looking statements except as
may be required by law.
About HarscoHarsco Corporation serves key
industries that are fundamental to worldwide economic development,
including steel and metals production, railways and energy.
Harsco’s common stock is a component of the S&P SmallCap
600 Index and the Russell 2000 Index. Additional information
can be found at www.harsco.com.
Investor Contact
David Martin
717.612.5628
damartin@harsco.com
Media Contact
Kenneth Julian
717.730.3683
kjulian@harsco.com
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