Williams Industrial files for Chapter 11, to be acquired for $60M

Williams Industrial Services announced that it and certain of its subsidiaries have filed voluntary Chapter 11 proceedings in the U.S. Bankruptcy Court for the District of Delaware and agreed to sell substantially all of the company and its subsidiaries assets to EnergySolutions for $60M. The company and EnergySolutions 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 $60M. 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. In order to provide necessary funding during the Chapter 11 proceeding, the Company has received commitments for two debtor-in-possession 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 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 $12M. The second facility is a delayed draw term loan with the company’s existing term lenders which will provide up to $19.5M of incremental liquidity following the petition filing. 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, 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. 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 $361M 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 $8M 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.