Item 1.01 Entry into a Material Definitive Agreement.
On January 9, 2023, Williams Industrial Services Group Inc. (the "Company")
entered into the following agreements, each of which is described further below:
· a third amendment (the "RC Amendment") to its Revolving Credit and Security
Agreement, dated December 16, 2020, by and among the Company and certain of its
subsidiaries as borrowers or guarantors, PNC Bank, National Association, as
agent for the lenders, and the lenders party thereto (as amended, the
"Revolving Credit Agreement");
· a third amendment (the "Term Loan Amendment") to its Term Loan, Guarantee and
Security Agreement, dated December 16, 2020, by and among the Company and
certain of its subsidiaries as borrowers or guarantors, EICF Agent LLC, as
agent for the lenders, and the lenders party thereto (as amended, the "Term
Loan Agreement"); and
· two unsecured promissory notes in favor of the Wynnefield Lenders (as defined
below) (together, the "Wynnefield Loans").
RC Amendment and Term Loan Amendment
The RC Amendment, among other things, (i) modifies the financial covenants to
require that the Company achieve certain designated minimum levels of trailing
twelve-month EBITDA (as defined in the Revolving Credit Agreement) as of the end
of each fiscal month beginning on February 5, 2023, and ending December 31,
2023; (ii) amends the calculation of EBITDA to include (or "add back") certain
non-recurring losses and expenses incurred in connection with projects executed
by the Company's Jacksonville, Florida office, one-time costs and expenses
incurred in connection with the Company's transmission and distribution business
segment start-up, non-recurring costs and expenses arising out of the
implementation by the Company of a new enterprise resource planning ("ERP")
system, and non-recurring costs and expenses arising out of pro forma headcount
reductions implemented by the Company and certain litigation with a former
executive and a competitor of the Company that was settled in the fourth quarter
of 2022 (in each case, subject to certain specific dollar limits for certain
fiscal quarters commencing in the second fiscal quarter of 2021 and ending
December 31, 2022); (iii) provides temporary reserve relief of up to $1,000,000
from the date of the RC Amendment until June 30, 2023; (iv) reduces the Eligible
Unbilled Receivables (as defined in the Revolving Credit Agreement) sublimit
from $7,500,000 to $5,500,000; (v) increases the Applicable Margin (as defined
in the Revolving Credit Agreement) by 2%; and (vi) provides for an amendment fee
of $300,000 payable when the loan obligations under the Revolving Credit
Agreement are repaid or, if earlier, June 30, 2023, and an exit fee of $300,000
to be paid upon the occurrence of certain stated events, including a prepayment
or maturity of the loan obligations under the Revolving Credit Agreement.
The Term Loan Amendment, among other things, (i) modifies the financial
covenants to require that the Company achieve certain designated minimum levels
of trailing twelve-month EBITDA (as defined in the Term Loan Agreement) as of
the end of each fiscal month beginning on February 5, 2023, and ending December
31, 2023; (ii) amends the calculation of EBITDA to include (or "add back")
certain non-recurring losses and expenses incurred in connection with certain
projects executed by the Company's Jacksonville, Florida office, one-time costs
and expenses incurred in connection with the Company's transmission and
distribution business segment start-up, non-recurring costs and expenses arising
out of the implementation by the Company of a new ERP system, and non-recurring
costs and expenses arising out of pro forma headcount reductions implemented by
the Company and certain litigation with a former executive and a competitor of
the Company that was settled in the fourth quarter of 2022 (in each case,
subject to certain specific dollar limits for certain fiscal quarters commencing
in the second fiscal quarter of 2021 and ending December 31, 2022); (iii)
adjusts the applicable interest rate to SOFR (as defined in the Term Loan
Agreement) plus 11%; (iv) for each quarterly interest payment commencing January
1, 2023 through and including January 1, 2024, caps the amount of quarterly
interest payable in cash at 10% per annum, with the remainder being payable in
kind; (v) defers amortization payments from the January 1, 2023 quarterly
payment date until and including the January 1, 2024 quarterly payment date;
(vi) increases the excess cash flow sweep from 50% to 75% for the fiscal year
ending December 31, 2023 and each fiscal year thereafter; (vii) requires certain
additional reporting obligations, including the delivery of weekly updates of a
13-week cash flow forecast and hosting additional periodic conference calls with
management and named advisors; (viii) increases, from the pre-existing levels,
the permitted total leverage of the Company for the four quarter periods ended
December 31, 2022 through March 31, 2024; and (ix) provides for an amendment fee
equal to 1% of the principal loan balance under the Term Loan Agreement, payable
in kind.
The Company previously entered into a second amendment to its Term Loan
Agreement on December 30, 2022 (together with the Term Loan Amendment, the "Term
Loan Amendments"), pursuant to which, among other things, the lenders agreed to
defer payment of the principal, and part of the interest, due on January 1, 2023
to January 9, 2023.
The Company expects to include each of the RC Amendment and the Term Loan
Amendments as an exhibit to a future periodic report, to be filed with the U.S.
Securities and Exchange Commission. The foregoing descriptions do not constitute
a complete summary of the terms of the RC Amendment or the Term Loan Amendments
and are qualified in their entirety by reference to the full text of the
respective amendment.
Wynnefield Loans
The Wynnefield Loans consist of (i) an Unsecured Promissory Note by and among
the Company, as borrower, certain of its subsidiaries, as guarantors under a
separate Guaranty Agreement, and Wynnefield Partners Small Cap Value, LP I in
the aggregate principal amount of $400,000 and (ii) an Unsecured Promissory Note
by and among the Company, as borrower, certain of its subsidiaries, as
guarantors under a separate Guaranty Agreement, and Wynnefield Partners Small
Cap Value, LP (together with Wynnefield Partners Small Cap Value, LP I, the
"Wynnefield Lenders") in the aggregate principal amount of $350,000. All
principal and interest will be due on the maturity date of the Wynnefield Loans,
which will be the earliest of (i) December 23, 2025; (ii) a change in control of
the Company; (iii) a refinancing or maturity extension of either of the Term
Loan Agreement or the Revolving Credit Agreement; or (iv) an acceleration
following the occurrence of an event of default (as defined in the Wynnefield
Loans, and which includes any default under the Term Loan Agreement or the
Revolving Credit Agreement). The Wynnefield Loans bear interest at the fixed
rate of (i) 8.0% per annum from the closing date; (ii) 13.0% per annum from and
after the maturity date; and (iii) 13.0% per annum from and after an event of
. . .
Item 2.02 Results of Operations and Financial Condition.
On January 11, 2023, the Company issued a press release providing further
revised guidance for the results of operations expected for the full fiscal year
ended December 31, 2022 and announcing that it has initiated a review of
strategic alternatives. A copy of the press release is attached hereto as
Exhibit 99.1 and is incorporated herein by reference.
The information in this Item 2.02, including Exhibit 99.1, shall not be deemed
"filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or otherwise subject to the liabilities of that
section, and shall not be incorporated by reference into any registration
statement or other document filed under the Securities Act of 1933, as amended,
or the Exchange Act, regardless of the general incorporation language contained
in such filing. Without limiting the generality of the foregoing, the text of
the press release set forth under the heading entitled "Forward-looking
Statement Disclaimer" is incorporated by reference into this Item 2.02.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Item 1.01 of this Current Report on Form 8-K is
incorporated by reference into this Item 2.03.
Item 9.01 Financial Statements and Exhibits.
Exhibit Number Description
99.1 Press Release, dated January 11, 2023.
104 Cover Page Interactive Data File (formatted as inline XBRL and
contained in Exhibit 101).
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