HC2 Holdings, Inc. HCHC announced the acquisition of Banker Steel Holdco LLC, based in Lynchburg, Va., Through its infrastructure arm, DBM Global. The other party to the buyout was Atlas Holdings LLC, which included Banker Steel Holdco in its portfolio.
Notably, the value of the transaction was $ 145 million. The deal was announced by HC2 Holdings on March 15, 2021.
In addition, DBM Global has entered into a credit agreement providing it with a revolving credit facility valued at $ 110 million and a term loan of $ 110 million.
Based in Phoenix, Arizona, DBM Global specializes in integrated steel construction services and asset management solutions. It operates in various markets including healthcare, industry, transportation, commerce and others.
Banker Steel is committed to providing fabricated structural steel as well as assembly services to the industrial and commercial construction markets of the South East and East Coast regions. It has six operating companies and employs 1,500 people.
It should be noted here that the purchase price of $ 145 million was settled by DBM Global through several means – including $ 25 million in cash (received as an intercompany settlement from HC2 Holdings), 64, $ 1 million of the new revolving credit facility / term loan, $ 6.3 million of debt assumed by Banker Steel and $ 49.6 million of seller’s bills.
In connection with the purchase, the six operating companies of Banker Steel, including Innovative Detailing and Engineering Solutions; Banker Steel Co., LLC; Lynchburg Freight and Specialty LLC; New York Builders, LLC; Derr & Isbell Construction LLC; and Memco LLC – now part of DBM Global. At the end of April, Banker Steel’s order book stood at $ 800 million.
With additional operating companies and staff, the acquisition of Banker Steel will strengthen DBM Global’s geographic footprints. In addition, it will be much easier to take advantage of the growth opportunities in the US infrastructure market. Banker Steel’s backlog of $ 800 million at the end of April is an added bonus. Overall, the buyout is expected to increase DBM Global’s revenues and earnings before interest, taxes, depreciation and amortization.
Details of the credit agreement
Through the new credit agreement, DBM Global acquired senior secured debt of $ 220 million. Part of the $ 110 million term loan bears an interest rate of 3.25% and is expected to mature on May 31, 2026. The second part, a $ 110 million revolving credit facility, bears interest at an interest rate equivalent to the prime rate less 1.10%. Expiration is scheduled for May 31, 2024.
DBM Global intends to use the proceeds of the credit agreement to finance its buyout of Banker Steel (part of it), pay off the (existing) credit agreement and loan, and fund the objectives. company generals.
The credit agreement will provide liquidity, operational flexibility and help reduce the cost of capital for DBM Global.
Price and peer performance
HC2 Holdings’ efforts to boost growth opportunities, inorganic business, reduce company expenses and strengthen the balance sheet are expected to help the company in the future. The headwinds linked to the pandemic remain worrying.
Over the past three months, the company’s shares have gained 8.4% against industry growth of 11.7%.
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Some other companies in the same industry have embarked on buyout activities in recent months General Electricity Company GE, Danaher Company HRD and Raven Industries, Inc. RAVN.
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