Historic energy infrastructure firm Babcock & Wilcox has gained a two-year credit extension and finance agreement as it deals with ongong fiscal struggles and the current economic crisis caused by the coronavirus pandemic.
The 153-year-old Ohio-based steam boiler and power plant components company will receive up to $70m in new financing as it amends its credit agreement and extends its current revolving credit facility to a June 2022 maturity date.
B. Riley Financial Inc. is providing $30m in new Tranche A last-out loans and is committed to another $35m of incremental last-out loans, according to the release. A last-out loan is a first-lien bank loan, part of which is subordinate to other lenders in the event of a default.
The lender also could make another $5m in last-out term loans available for working capital purposes if Babcock & Wilcox request it. The company has more than 4000 employees and is committed to numerous energy infrastructure projects globally.
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“The closing of this financing agreement, during an unprecedented global crisis, is a significant accomplishment,” said Kenneth Young, B&W chief executive, in a statement this week.
“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 company has detailed intentions to amend its credit agreements repeatedly as it has struggled financially over recent years. Previous federal filings indicated that B&W could file for bankruptcy as it was weighed down by a power industry downturn that has impacted numerous companies, including McDermott International and Westinghouse in recent years.
“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,” Young said.
“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.”
The company had layoffs in 2017 and only last year announced a previous revised credit agreement and a 1-for-10 reverse stock split to buoy its share price.
Earlier this year, however B&W announced a fourth-quarter raw earnings report of $19m, compared with the $114m loss in the previous year. The full-year 2019 operating income totaled a $129.7m loss, compared with a $658m loss in 2018.
The work goes on for the company even as its extends credit to stay out of bankruptcy. In April, B&W announced it was awarded a two-year service contract for waste-to-energy plants in Europe, and supplying cooling towers for a petrochemical plant in Belgium.
However, the impact of COVID-19 policies such as social distancing, border closings and remote work requirements have muted recovery efforts, according to the company’s latest earnings statement.
Babcock & Wilcox was created in 1867. It is known for steam boilers, nuclear plant components and engineering, procurement and construction (EPC) work.
