B&W Completes Two-Year Financing Agreement and Credit Extension
May 14 2020 - 4:05PM
Business Wire
- Extends current revolving credit facility and availability
for letters of credit for two years
- Strengthens capital structure in support of the Company’s
long-term operations
Babcock & Wilcox Enterprises, Inc. (NYSE: BW) (“B&W”)
announced today that the Company has amended its Credit Agreement,
which amendment replaces and supersedes the previously disclosed
agreement to refinance the Company’s senior debt by May 15, 2020,
among other things. Under the terms of the amended Credit
Agreement, the Company's current revolving credit facility and
availability for letters of credit will be extended for two years
with a maturity date of June 30, 2022.
In addition, B. Riley Financial, Inc. (“B. Riley”) has provided
$30 million of new Tranche A last-out term loans and has committed
to provide $35 million of additional incremental last-out term
loans through the maturity date. These incremental last-out term
loans will amortize the revolving credit facility through
reductions in revolving credit facility commitments over time. The
proceeds from the last-out term loans are expected to be used to
pay transaction fees and expenses, repay outstanding revolving
credit facility borrowings and to support working capital and
general corporate purposes. In addition to the $65 million total of
funding described above, B. Riley has also committed to make an
additional $5 million in last-out term loans available at the
Company’s request for working capital purposes.
B. Riley has also provided a limited guaranty for all
obligations under the Company's revolving credit facility (other
than letters of credit and certain other contingent obligations),
including outstanding revolving credit loans and earned interest
and fees. This guaranty will replace the refinancing backstop
commitment previously provided by B. Riley.
Under the amended Credit Agreement, the current sublimit on
borrowings under the revolving credit facility is maintained; the
revolving credit facility continues to be available for existing
and new letters of credit, subject to certain sublimits; and
certain interest payments due to the senior lender syndicate will
be deferred to 2021.
The Company has also entered into an agreement with B. Riley to
equitize approximately $16.2 million of fees and interest payments
through December 31, 2020 on the unpaid principal amount of the
last-out term loans, including the new Tranche A term loans. All
stock issued in payment of these fees and interest will be valued
at a price equal to the average volume weighted average price of
the common stock over 15 consecutive trading days beginning on May
15, 2020, subject to customary adjustments and, to the extent
required, stockholder approval under the rules of the New York
Stock Exchange.
Further details can be found in the Form 8-K filed with the SEC
on May 14, 2020.
“The closing of this financing agreement, during an
unprecedented global crisis, is a significant accomplishment,” said
Kenneth Young, B&W Chief Executive Officer. “With our financial
position strengthened and long-term availability to support
multi-year projects, we are well-positioned to build on the
momentum we have achieved over the last year. We appreciate the
continued support of our lenders, customers, suppliers, employees
and shareholders as we have worked through this process.”
“The entire management team, along with our experienced and
dedicated employees, recognizes the critical role we play to
provide essential energy and environmental products and services,”
Mr. Young continued. “We are committed to continuing to execute our
strategy to leverage our best-in-class core technologies,
engineering and services for electric utility, power generation and
industrial customers around the world, and to achieve sustained
value for our shareholders.”
Forward-Looking Statements
The Company cautions that this release contains forward-looking
statements, including, without limitation, statements relating to
the application of the proceeds of the term loans under the
Agreement, and management expectations regarding future growth and
our ability to achieve sustained value for our shareholders. These
forward-looking statements are based on management’s current
expectations and involve a number of risks and uncertainties,
including, among other things, the impact of COVID-19 on us and the
capital markets; our recognition of any asset impairments as a
result of any decline in the value of our assets or our efforts to
dispose of any assets in the future; our ability to obtain and
maintain sufficient financing to provide liquidity to meet our
business objectives, surety bonds, letters of credit and similar
financing; our ability to comply with the requirements and service
the indebtedness under the amended Credit Agreement; our ability to
obtain waivers of required pension contributions; the highly
competitive nature of our businesses; general economic and business
conditions, including changes in interest rates and currency
exchange rates; cancellations of and adjustments to backlog and the
resulting impact from using backlog as an indicator of future
earnings; our ability to perform contracts on time and on budget,
in accordance with the schedules and terms established by the
applicable contracts with customers; failure by third-party
subcontractors, partners or suppliers to perform their obligations
on time and as specified; our ability to successfully resolve
claims by vendors for goods and services provided and claims by
customers for items under warranty; our ability to realize
anticipated savings and operational benefits from our restructuring
plans, and other cost-savings initiatives; our ability to
successfully address productivity and schedule issues in our Vølund
& Other Renewable segment, including the ability to complete
our European EPC projects within the expected time frame and the
estimated costs; our ability to successfully partner with third
parties to win and execute contracts within our SPIG and Vølund
& Other Renewable segments; changes in our effective tax rate
and tax positions, including any limitation on our ability to use
our net operating loss carryforwards and other tax assets; our
ability to maintain operational support for our information systems
against service outages and data corruption, as well as protection
against cyber-based network security breaches and theft of data;
our ability to protect our intellectual property and renew licenses
to use intellectual property of third parties; our use of the
percentage-of-completion method of accounting to recognize revenue
over time; our ability to successfully manage research and
development projects and costs, including our efforts to
successfully develop and commercialize new technologies and
products; the operating risks normally incident to our lines of
business, including professional liability, product liability,
warranty and other claims against us; changes in, or our failure or
inability to comply with, laws and government regulations; actual
or anticipated changes in governmental regulation, including trade
and tariff policies; difficulties we may encounter in obtaining
regulatory or other necessary permits or approvals; changes in, and
liabilities relating to, existing or future environmental
regulatory matters; changes in actuarial assumptions and market
fluctuations that affect our net pension liabilities and income;
potential violations of the Foreign Corrupt Practices Act; our
ability to successfully compete with current and future
competitors; the loss of key personnel and the continued
availability of qualified personnel; our ability to negotiate and
maintain good relationships with labor unions; changes in pension
and medical expenses associated with our retirement benefit
programs; social, political, competitive and economic situations in
foreign countries where we do business or seek new business; the
possibilities of war, other armed conflicts or terrorist attacks;
the willingness of customers and suppliers to continue to do
business with us on reasonable terms and conditions; our ability to
successfully consummate strategic alternatives for non-core assets,
if we determine to pursue them; and the other factors specified and
set forth under "Risk Factors" in our periodic reports filed with
the Securities and Exchange Commission, including our most recent
annual report on Form 10-K. The Company cautions not to place undue
reliance on these forward-looking statements, which speak only as
of the date of this report, and the Company undertakes no
obligation to update or revise any forward-looking statement,
except to the extent required by applicable law.
About B&W
Headquartered in Akron, Ohio, Babcock & Wilcox is a global
leader in energy and environmental technologies and services for
the power and industrial markets. Follow us on Twitter
@BabcockWilcox and learn more at www.babcock.com.
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version on businesswire.com: https://www.businesswire.com/news/home/20200514005846/en/
Investors: Megan Wilson Vice President, Corporate
Development & Investor Relations Babcock & Wilcox
704.625.4944 | investors@babcock.com Media: Ryan Cornell
Public Relations Babcock & Wilcox 330.860.1345 |
rscornell@babcock.com
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