UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

Form 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):    April 30, 2017

 

LAYNE CHRISTENSEN COMPANY

(Exact name of registrant as specified in its charter)

 

Delaware

(State or other jurisdiction of

incorporation)

001-34195

(Commission

File Number )

48-0920712

(I.R.S. Employer

Identification No.)

    

1800 Hughes Landing Blvd., Ste. 800

The Woodlands, Texas  77380

(Address of principal executive offices)(Zip Code)

 

(281) 475-2600

(Registrant's telephone number, including area code)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

[  ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[  ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[  ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[  ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


 

Item 2.01. COMPLETION OF ACQUISITON OR DISPOSITION OF ASSETS

On April 30, 2017 Layne Christensen Company ("Layne") and certain of its subsidiaries (collectively, the "Company"), closed on its previously announced Asset Purchase Agreement (the "Purchase Agreement") selling substantially all of the assets of Layne's Heavy Civil business for $10.1 million, less an estimate of the business segment’s working capital adjustment of $4.3 million (subject to customary post-closing true-up).  The purchaser of the Heavy Civil business is Reycon Partners LLC (the "Buyer"), which is owned by a group of private investors, including members of the current Heavy Civil senior management team.  

 

The total value of the consideration paid pursuant to the Purchase Agreement was determined through arm’s length negotiations between the Company and the Buyer that took into account a number of factors of the Heavy Civil business, including historical revenues, operating history, business contracts and other factors.

 

Subject to certain exceptions, the Buyer assumed the Company's obligations under the contracts of the Heavy Civil business that were open as of the date of the Purchase Agreement and the Company retained other obligations of the business, including warranty obligations and litigation matters for the business' contracts that were completed as of the date of the Purchase Agreement.

 

The full text of the Asset Purchase Agreement, as amended, for this sale is attached as Exhibits 2.1, 2.2 and 2.3 to this Form 8-K and is incorporated by reference herein.  Unaudited Pro Forma Financial Statements and accompanying notes are attached as Exhibit 99.1 to this current report and incorporated herein by reference.

 

 

Item 7.01. REGULATION FD DISCLOSURE

A copy of the May 1, 2017 press release announcing the closing of the sale of Layne’s Heavy Civil business is attached to this current report as Exhibit 99.2 and is incorporated herein by reference.  This press release shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be incorporated by reference in any registration statement filed under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated by reference therein.

 

Item 9.01 FINANCIAL STATEMENTS AND EXHIBITS

(b) Pro Forma Financial Information

The following Unaudited Pro Forma Consolidated Financial Statements are furnished with this Form 8-K as Exhibit 99.1 and are incorporated herein by reference:

 

 

The Unaudited Pro Forma Consolidated Statements of Operations for the fiscal years ended January 31, 2017, 2016 and 2015 are presented as if the disposition of Heavy Civil occurred on February 1, 2014.

 

 

The Unaudited Pro Forma Consolidated Balance Sheet of Layne as of January 31, 2017 is presented as if the disposition of Heavy Civil occurred on February 1, 2016.

 

The Unaudited Pro Forma Consolidated Financial Statements are presented for illustrative purposes only and are not intended to represent or be indicative of our consolidated results of operations or financial position that would have been reported had the disposition of Heavy Civil been completed as of the dates presented, and should not be taken as representation of our future consolidated results of operations or financial condition. The pro forma adjustments are based on available information and certain assumptions that management believes are reasonable under the circumstances.

 


 

 


 

(d) Exhibits

Exhibit Number

 

Description of Exhibit

 

 

 

Exhibit 2.1

 

Asset Purchase Agreement, dated February 8, 2017, by and among Layne Christensen Company and certain subsidiaries, as Sellers, and Reycon Partners, LLC, as Buyer (filed as Exhibit 2.1 to Layne’s Form 10-K filed April 10, 2017, and incorporated herein by this reference).

Exhibit 2.2

 

Amendment No. 1 to Asset Purchase Agreement, dated March 20, 2017, by and among Layne Christensen Company and certain subsidiaries, as Sellers, and Reycon Partners, LLC, as Buyer.

Exhibit 2.3

 

Amendment No. 2 to Asset Purchase Agreement, dated April 28, 2017, by and among Layne Christensen Company and certain subsidiaries, as Sellers, and Reycon Partners, LLC, as Buyer.

Exhibit 99.1

 

Unaudited Pro Forma Financial Statements and accompanying notes

Exhibit 99.2

 

Press Release dated May 1, 2017 of Layne Christensen Company, furnished pursuant to Item 7.01

 

 

 

* The schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. Layne Christensen Company undertakes to furnish supplemental copies of any of the omitted schedules or exhibits upon request by the Securities and Exchange Commission.

 

 

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

  

LAYNE CHRISTENSEN COMPANY 

 

  

(Registrant)

 

 

Date: May 4, 2017

  By:

/s/ J. Michael Anderson

 

  

J. Michael Anderson

Senior Vice President and Chief Financial Officer

 


 

 


 

EXHIBIT INDEX

Exhibit Number

 

Description of Exhibit

 

 

 

Exhibit 2.1

 

Asset Purchase Agreement, dated February 8, 2017, by and among Layne Christensen Company and certain subsidiaries, as Sellers, and Reycon Partners, LLC, as Buyer (filed as Exhibit 2.1 to Layne’s Form 10-K filed April 10, 2017, and incorporated herein by this reference).

Exhibit 2.2

 

Amendment No. 1 to Asset Purchase Agreement, dated March 20, 2017, by and among Layne Christensen Company and certain subsidiaries, as Sellers, and Reycon Partners, LLC, as Buyer.

Exhibit 2.3

 

Amendment No. 2 to Asset Purchase Agreement, dated April 28, 2017, by and among Layne Christensen Company and certain subsidiaries, as Sellers, and Reycon Partners, LLC, as Buyer.

Exhibit 99.1

 

Unaudited Pro Forma Financial Statements and accompanying notes

Exhibit 99.2

 

Press Release dated May 1, 2017 of Layne Christensen Company, furnished pursuant to Item 7.02

 

* The schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. Layne Christensen Company undertakes to furnish supplemental copies of any of the omitted schedules or exhibits upon request by the Securit ies and Exchange Commission.

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 2.2

AMENDMENT NO. 1 TO
ASSET PURCHASE AGREEMENT

THIS AMENDMENT NO. 1 TO ASSET PURCHASE AGREEMENT (this " Amendment "), is made and entered into this 20 th day of March, 2017, by and among Layne Christensen Company, a Delaware corporation (" Parent "), Layne Heavy Civil, Inc., an Indiana corporation (" LHC "), W.L. Hailey & Company, Inc. , a Tennessee corporation (" WLH "), Meadors Construction Co., Inc. , a Florida corporation (" MCC "), Reynolds Water Islamorada, LLC , a Delaware limited liability company (" RWI "), Layne Southwest, Inc. , a New Mexico corporation (" Southwest "), and Layne Transport Co. , an Indiana corporation (" Transport " and, together with Parent, LHC, WLH, MCC, RWI and Southwest, each a " Seller " and, collectively, " Sellers "), Reycon Partners LLC, a Delaware limited liability company ("Buyer"), and Jeffrey Reynolds, Leslie F. Archer, Kevin F. Strott, Michael P. Burton, Kevin D. Schemwell, Wesley L. Self and Elizabeth Smith (each, a "Guarantor" and collectively, " Guarantors ").  Sellers, Buyer and Guarantors are sometimes individually referred to herein as a " Party " and, collectively, the " Parties ".

RECITALS

WHEREAS, the Parties previously entered into that certain Asset Purchase Agreement dated February 8, 2017 (the " Agreement ") pursuant to which Sellers agreed to sell, and Buyer agreed to purchase, substantially all of the assets of the Seller's Heavy Civil  Division; and

WHEREAS, the Parties desire to extend the Drop Dead Date (as defined in the Purchase Agreement) to April 28, 2017;

NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

1.01 Amendment to Agreement .  Section 9.01(b)(i) of the Agreement is amended and restated in its entirety as follows:

Buyer is not then in material breach of any provision of this Agreement and there has been a material breach, inaccuracy in or failure to perform any representation, warranty, covenant or agreement made by Sellers pursuant to this Agreement that would give rise to the failure of any of the conditions specified in Article VII and such breach, inaccuracy or failure cannot be cured by Sellers by April 28, 2017 (the " Drop Dead Date "); or

1.02 Defined Terms . Capitalized terms used in this Amendment without definition shall have the meaning assigned to them in the Agreement, unless the context clearly requires otherwise.

1.03 No Other Amendments . Except as amended herein, the Agreement continues, unmodified, in full force and effect.

1

 


 

1.04 Headings .  The headings in this Amendment are for reference only and shall not affect the interpretation of this Amendment .

Governing Law

.  This Amendment shall be governed by the laws, both procedural and substantive, of the State of Delaware without regard to its conflict of laws provisions that if applied might require the application of the laws of another jurisdiction.

Counterparts

.  This Amendment may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Amendment delivered by e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Amendment.

[SIGNATURE PAGE FOLLOWS]

 

2

 


Exhibit 2.2

IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to Asset Purchase Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.

SELLERS:

LAYNE CHRISTENSEN COMPANY

LAYNE HEAVY CIVIL, INC.

W.L. HAILEY & COMPANY, INC.

MEADORS CONSTRUCTION CO., INC.

REYNOLDS WATER ISLAMORADA, LLC

LAYNE SOUTHWEST, INC.

LAYNE TRANSPORT CO.

 

By: / s/ J. Michael Anderson

Name: J. Michael Anderson

Title:  Senior Vice President and Chief Financial Officer

 

 

BUYER:

 

REYCON PARTNERS LLC

 

 

By: /s/ Leslie F. Archer

Name: Leslie F. Archer

Title: President

 

 

GUARANTORS

 

 

/s/ Jeffrey Reynolds

Name: Jeffrey Reynolds

 

 

/s/ Leslie F. Archer

Name: Leslie F. Archer

 

[Signature Page to Amendment No. 1 to Asset Purchase Agreement]

 

 

 

CORE / 0044919 . 0114 / 132236299 . 2     


 

 

 

/s/ Kevin F. Strott

Name: Kevin F. Strott

 

 

/s/ Michael P. Burton

Name: Michael P. Burton

 

 

/s/ Kevin D. Shemwell

Name: Kevin D. Schemwell

 

 

/s/ Wesley L. Self

Name: Wesley L. Self

 

 

/s/ Elizabeth Smith

Name:  Elizabeth Smith

 

[Signature Page to Amendment No. 1 to Asset Purchase Agreement]

 

Exhibit 2.3

AMENDMENT NO. 2 TO
ASSET PURCHASE AGREEMENT

THIS AMENDMENT NO. 2 TO ASSET PURCHASE AGREEMENT (this " Amendment "), is made and entered into this 28th day of April, 2017, by and among Layne Christensen Company, a Delaware corporation (" Parent "), Layne Heavy Civil, Inc., an Indiana corporation (" LHC "), W.L. Hailey & Company, Inc. , a Tennessee corporation (" WLH "), Meadors Construction Co., Inc. , a Florida corporation (" MCC "), Reynolds Water Islamorada, LLC, a Delaware limited liability company (" RWI "), Layne Southwest, Inc. , a New Mexico corporation (" Southwest "), and Layne Transport Co. , an Indiana corporation (" Transport " and, together with Parent, LHC, WLH, MCC, RWI and Southwest, each a " Seller " and, collectively, " Sellers "), Reycon Partners LLC, a Delaware limited liability company (" Buyer "), and Jeffrey Reynolds, Leslie F. Archer, Kevin F. Strott, Michael P. Burton, Kevin D. Shemwell, Wesley L. Self and Elizabeth Smith (each, a " Guarantor " and collectively, " Guarantors ").  Sellers, Buyer and Guarantors are sometimes individually referred to herein as a " Party " and, collectively, the " Parties ".

RECITALS

WHEREAS, the Parties previously entered into that certain Asset Purchase Agreement dated February 8, 2017 and as amended by that certain Amendment No. 1 to Asset Purchase Agreement, dated March 20, 2017 (the " Agreement ") pursuant to which Sellers agreed to sell, and Buyer agreed to purchase, substantially all of the assets of the Seller's Heavy Civil  Division; and

WHEREAS, the Parties desire to remove RWI as a Seller, revise the Disclosure Schedules and revise Exhibit J;

NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

1.01 Amendments to Agreement .  

(a) Section 1.01 of the Agreement is amended to delete the definition of Sellers and replace it with the following:

"Sellers" means Transport, Parent, LHC, WLH, MCC and Southwest, collectively.

(b) Section 2.01 of the Agreement is amended by striking Sections 2.01(n) and (o) and replacing them with the following Sections 2.01(n), (o) and (p):

(n) 100% of the membership interests in RWI;

1

 

 

CORE / 0044919 . 0114 / 132540436 . 7


 

(o) all rights to all Actions of any nature available to or being pursued by any of the Sellers to the extent related to the Assigned Contracts, whether arising by way of counterclaim or otherwise; and

(p) all goodwill associated with any of the assets described in the foregoing clauses.

(c) Subject to the satisfaction (or waiver) of all the conditions to closing in Article VII of the Agreement, the closing of the transaction, including the funding of the Purchase Price, will occur on April 28, 2017, but the transactions contemplated by the Agreement shall be deemed to be effective for all purposes as of 11:59 p.m. Central time on April 30, 2017.

(d) Schedule 1.01(a) (Employees) is amended and restated in its entirety and replaced with the Schedule 1.01(a) attached hereto.

(e) Schedule 2.01(c)(i) (Assigned Contracts) is amended and restated in its entirety and replaced with the Schedule 2.01(c)(i) attached hereto.

(f) Schedule 2.01(h) (Prepaid Expenses) is amended and restated in its entirety and replaced with the Schedule 2.01(h) attached hereto.

(g) Schedule 2.01(i) (Vehicles, Equipment and Tools) is amended and restated in its entirety and replaced with the Schedule 2.01(i) attached hereto.

(h) Schedule 3.02(c)(x) (Required Third Party Consents) is amended and restated in its entirety and replaced with the Schedule 3.02(c)(x) attached hereto.

(i) Schedule 4.03 (Consents) is amended and restated in its entirety and replaced with the Schedule 4.03 attached hereto.

(j) Exhibit J (Project Based Incentive Plan) is amended and restated in its entirety and replaced with the Exhibit J attached hereto.

1.02 Defined Terms . Capitalized terms used in this Amendment without definition shall have the meaning assigned to them in the Agreement, unless the context clearly requires otherwise.

1.03 No Other Amendments . Except as amended herein, the Agreement continues, unmodified, in full force and effect.

1.04 Headings .  The headings in this Amendment are for reference only and shall not affect the interpretation of this Amendment.

2

 

 

CORE / 0044919 . 0114 / 132540436 . 7


 

Governing Law

.  This Amendment shall be governed by the laws, both procedural and substantive, of the State of Delaware without regard to its conflict of laws provisions that if applied might require the application of the laws of another jurisdiction.

Counterparts

.  This Amendment may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Amendment delivered by e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Amendment.

[SIGNATURE PAGE FOLLOWS]

 

3

 

 

CORE / 0044919 . 0114 / 132540436 . 7


Exhibit 2.3

IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 2 to Asset Purchase Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.

SELLERS:

LAYNE CHRISTENSEN COMPANY

 

 

By: /s/ J. Michael Anderson

Name: J. Michael Anderson

Title:  Senior Vice President and Chief  Financial Officer

 

 

LAYNE HEAVY CIVIL, INC.

W.L. HAILEY & COMPANY, INC.

MEADORS CONSTRUCTION CO., INC.

REYNOLDS WATER ISLAMORADA, LLC

LAYNE SOUTHWEST, INC.

LAYNE TRANSPORT CO.

 

By: /s/ J. Michael Anderson

Name: J. Michael Anderson

Title: Vice President and Chief Financial Officer

 

 

BUYER:

 

REYCON PARTNERS LLC

 

 

By: /s/ Leslie F. Archer

Name: Leslie F. Archer

Title: President

 


[Signature Page to Amendment No. 2 to Asset Purchase Agreement]

 

CORE / 0044919 . 0114 / 132540436 . 7     


 

 

GUARANTORS

 

 

/s/ Jeffery Reynolds

Name: Jeffrey Reynolds

 

 

/s/ Leslie F. Archer

Name: Leslie F. Archer

 

 

 

/s/ Kevin F. Strott

Name: Kevin F. Strott

 

 

/s/ Michael P. Burton

Name: Michael P. Burton

 

 

/s/ Kevin D. Shemwell

Name: Kevin D. Shemwell

 

 

/s/ Wesley L. Self

Name: Wesley L. Self

 

 

/s/ Elizabeth Smith _________________________

Name:  Elizabeth Smith

 

11229819v2

[Signature Page to Amendment No. 2 to Asset Purchase Agreement]

CORE / 0044919 . 0114 / 132540436 . 7

Exhibit 99.1

 

 

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

 

Effective April 30, 2017, Layne Christensen Company ("Layne") and certain of its subsidiaries (collectively, the "Company"), completed its previously announced sale of substantially all of the assets of Layne's Heavy Civil business for $10.1 million, less an estimate of the business segment’s estimated working capital adjustment as of April 30, 2017.  The purchaser of the Heavy Civil business is Reycon Partners LLC (the "Buyer"), which is owned by a group of private investors, including members of the former Heavy Civil senior management team.  

 

Subject to certain exceptions, the Buyer assumed the Company's obligations under the contracts of the Heavy Civil business that were open as of the date of the Purchase Agreement and the Company will retain other obligations of the business, including warranty obligations and litigation matters for the business' contracts that were completed as of the date of the Purchase Agreement.  Any retained obligations are included in the following Unaudited Pro Forma Consolidated Financial Statements.  In addition, Layne and the buyer agreed to contingent consideration related to an outstanding contract receivable.  

 

In connection with the disposition of Heavy Civil, Layne received net proceeds consisting of $5.8 million in cash taking into account an estimated negative working capital adjustment of $4.3 million.  In connection with the disposition, there were approximately $1.1 million of transaction costs.  We intend to use the net proceeds from the sale for general corporate purposes and to pursue selective growth opportunities in our core businesses. These potential uses are not reflected in the Unaudited Pro Forma Consolidated Financial Statements. A full description of all pro forma adjustments are included herein.  Following the closing of the Purchase Agreement, Layne does not own any equity interest in Heavy Civil and Layne will no longer consolidate Heavy Civil business within its financial results.  

 

The following Unaudited Pro Forma Consolidated Financial Statements of Layne reflect the impact of the disposition of Heavy Civil, to remove the assets, liabilities and results of operations of the business, which are based upon, and should be read in conjunction with, our historical Consolidated Financial Statements and related notes included in our Annual Report on Form 10-K for the year ended January 31, 2017 filed on April 10, 2017.  

 

 

The Unaudited Pro Forma Consolidated Statements of Operations for the fiscal years ended January 31, 2017, 2016 and 2015 are presented as if the disposition of Heavy Civil occurred on February 1, 2014.

 

 

The Unaudited Pro Forma Consolidated Balance Sheet of Layne as of January 31, 2017 is presented as if the disposition of Heavy Civil occurred on February 1, 2016.

 

The Unaudited Pro Forma Consolidated Financial Statements are presented for illustrative purposes only and are not intended to represent or be indicative of our consolidated results of operations or financial position that would have been reported had the disposition of Heavy Civil been completed as of the dates presented, and should not be taken as representation of our future consolidated results of operations or financial condition. The pro forma adjustments are based on available information and certain assumptions that management believes are reasonable under the circumstances.  


1

 


LAYNE CHRISTENSEN COMPANY AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

 

 

Year Ended January 31, 2017

 

(in thousands, except per share data)

 

Historical Layne

 

 

Pro Forma Adjustments (a)

 

 

Pro Forma Layne

 

Revenues

 

$

601,972

 

 

$

137,189

 

 

$

464,783

 

Cost of revenues (exclusive of depreciation and amortization

  charges shown below)

 

 

(502,050

)

 

 

(128,910

)

 

 

(373,140

)

Selling, general and administrative expenses (exclusive of

   depreciation and amortization charges shown below)

 

 

(97,202

)

 

 

(11,655

)

 

 

(85,547

)

Depreciation and amortization

 

 

(26,911

)

 

 

(1,609

)

 

 

(25,302

)

Equity in earnings of affiliates

 

 

2,655

 

 

 

 

 

 

2,655

 

Restructuring costs

 

 

(17,348

)

 

 

(424

)

 

 

(16,924

)

Interest expense

 

 

(16,883

)

 

 

 

 

 

(16,883

)

Other income, net

 

 

4,951

 

 

 

222

 

 

 

4,729

 

Loss from continuing operations before income taxes

 

 

(50,816

)

 

 

(5,187

)

 

 

(45,629

)

Income tax expense

 

 

(1,420

)

 

 

 

 

 

(1,420

)

Net loss attributable to Layne Christensen Company

 

$

(52,236

)

 

$

(5,187

)

 

$

(47,049

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss per share information attributable to

 

 

 

 

 

 

 

 

 

 

 

 

Layne Christensen Company shareholders:

 

 

 

 

 

 

 

 

 

 

 

 

Loss per share from continuing operations - basic and diluted

 

$

(2.64

)

 

 

 

 

 

$

(2.38

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - basic and dilutive

 

 

19,786

 

 

 

 

 

 

 

19,786

 

2

 


 

LAYNE CHRISTENSEN COMPANY AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

 

 

Year Ended January 31, 2016

 

(in thousands, except per share data)

 

Historical Layne

 

 

Pro Forma Adjustments (a)

 

 

Pro Forma Layne

 

Revenues

 

$

683,010

 

 

$

164,905

 

 

$

518,105

 

Cost of revenues (exclusive of depreciation, amortization

  and impairment charges shown below)

 

 

(570,078

)

 

 

(159,320

)

 

 

(410,758

)

Selling, general and administrative expenses (exclusive of

  depreciation, amortization and impairment charges shown below)

 

 

(108,159

)

 

 

(9,874

)

 

 

(98,285

)

Depreciation and amortization

 

 

(32,685

)

 

 

(2,593

)

 

 

(30,092

)

Impairment charges

 

 

(4,598

)

 

 

 

 

 

(4,598

)

Equity in losses of affiliates

 

 

(612

)

 

 

 

 

 

(612

)

Restructuring costs

 

 

(9,954

)

 

 

(765

)

 

 

(9,189

)

Gain on extinguishment of debt

 

 

4,236

 

 

 

 

 

 

4,236

 

Interest expense

 

 

(18,011

)

 

 

 

 

 

(18,011

)

Other income, net

 

 

2,354

 

 

 

765

 

 

 

1,589

 

Loss from continuing operations before income taxes

 

 

(54,497

)

 

 

(6,882

)

 

 

(47,615

)

Income tax benefit/(expense)

 

 

1,635

 

 

 

2,372

 

 

 

(737

)

Net loss from continuing operations

 

 

(52,862

)

 

 

(4,510

)

 

 

(48,352

)

Net income from discontinued operations prior

  to Heavy Civil disposition

 

 

8,057

 

 

 

 

 

 

8,057

 

Net loss

 

 

(44,805

)

 

 

(4,510

)

 

 

(40,295

)

Net income attributable to noncontrolling interests

 

 

28

 

 

 

 

 

 

28

 

Net loss attributable to Layne Christensen Company

 

$

(44,777

)

 

$

(4,510

)

 

$

(40,267

)

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) income per share information attributable to

 

 

 

 

 

 

 

 

 

 

 

 

Layne Christensen Company shareholders:

 

 

 

 

 

 

 

 

 

 

 

 

Loss per share from continuing operations - basic and diluted

 

$

(2.68

)

 

 

 

 

 

$

(2.45

)

Income per share from discontinued operations prior to Heavy

  Civil disposition  - basic and diluted

 

 

0.41

 

 

 

 

 

 

 

0.41

 

Loss per share - basic and diluted

 

$

(2.27

)

 

 

 

 

 

$

(2.04

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - basic and dilutive

 

 

19,730

 

 

 

 

 

 

 

19,730

 

3

 


LAYNE CHRISTENSEN COMPANY AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

 

Year Ended January 31, 2015

 

(in thousands, except per share data)

 

Historical Layne

 

 

Pro Forma Adjustments (a)

 

 

Pro Forma Layne

 

Revenues

 

$

720,568

 

 

$

198,511

 

 

$

522,057

 

Cost of revenues (exclusive of depreciation and amortization

  charges shown below)

 

 

(610,844

)

 

 

(208,237

)

 

 

(402,607

)

Selling, general and administrative expenses (exclusive of

   depreciation and amortization charges shown below)

 

 

(117,085

)

 

 

(11,276

)

 

 

(105,809

)

Depreciation and amortization

 

 

(41,978

)

 

 

(4,359

)

 

 

(37,619

)

Equity in losses of affiliates

 

 

(2,002

)

 

 

 

 

 

(2,002

)

Restructuring costs

 

 

(2,698

)

 

 

(54

)

 

 

(2,644

)

Interest expense

 

 

(13,707

)

 

 

 

 

 

(13,707

)

Other income (loss), net

 

 

1,352

 

 

 

1,959

 

 

 

(607

)

Loss from continuing operations before income taxes

 

 

(66,394

)

 

 

(23,456

)

 

 

(42,938

)

Income tax benefit

 

 

3,945

 

 

 

 

 

 

3,945

 

Net loss from continuing operations

 

 

(62,449

)

 

 

(23,456

)

 

 

(38,993

)

Net loss from discontinued operations prior

  to Heavy Civil disposition

 

 

(46,878

)

 

 

 

 

 

(46,878

)

Net loss

 

 

(109,327

)

 

 

(23,456

)

 

 

(85,871

)

Net loss attributable to noncontrolling interests

 

 

(824

)

 

 

 

 

 

(824

)

Net loss attributable to Layne Christensen Company

 

$

(110,151

)

 

$

(23,456

)

 

$

(86,695

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss per share information attributable to

 

 

 

 

 

 

 

 

 

 

 

 

Layne Christensen Company shareholders:

 

 

 

 

 

 

 

 

 

 

 

 

Loss per share from continuing operations - basic and diluted

 

$

(3.22

)

 

 

 

 

 

$

(2.03

)

Loss per share from discontinued operations prior to Heavy

  Civil disposition  - basic and diluted

 

 

(2.39

)

 

 

 

 

 

 

(2.39

)

Loss per share - basic and diluted

 

$

(5.61

)

 

 

 

 

 

$

(4.42

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - basic and dilutive

 

 

19,630

 

 

 

 

 

 

 

19,630

 

4

 


LAYNE CHRISTENSEN COMPANY AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEETS

 

 

Year Ended January 31, 2017

 

(in thousands)

 

Historical Layne

 

 

Pro Forma Adjustments

 

 

Pro Forma Layne

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

69,000

 

 

$

5,694

 

(b)

$

74,694

 

Customer receivables, less allowance of $3,502 and $3,494, respectively

 

 

70,983

 

 

 

(13,731

)

(c)

 

57,252

 

Costs and estimated earnings in excess of billings on uncompleted contracts

 

 

71,593

 

 

 

(22,970

)

(c)

 

48,623

 

Inventories

 

 

21,123

 

 

 

(2,426

)

(c)

 

18,697

 

Other

 

 

17,784

 

 

 

(1,033

)

(c)

 

16,751

 

Total current assets

 

 

250,483

 

 

 

(34,466

)

 

 

216,017

 

Property and equipment, net

 

 

102,220

 

 

 

(5,235

)

(c)

 

96,985

 

Other assets:

 

 

 

 

 

 

 

 

 

 

 

 

Investment in affiliates

 

 

55,290

 

 

 

 

 

 

55,290

 

Goodwill

 

 

8,915

 

 

 

 

 

 

8,915

 

Other intangible assets, net

 

 

1,779

 

 

 

 

 

 

1,779

 

Other

 

 

17,464

 

 

 

(895

)

(c)

 

16,569

 

Total other assets

 

 

83,448

 

 

 

(895

)

 

 

82,553

 

Total assets

 

$

436,151

 

 

$

(40,596

)

 

$

395,555

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

58,109

 

 

$

(16,963

)

(d)

$

41,146

 

Billings in excess of costs and estimated earnings on uncompleted contracts

 

 

22,690

 

 

 

(3,530

)

(d)

 

19,160

 

Other current liabilities

 

 

64,139

 

 

 

893

 

(d, e)

 

65,032

 

Total current liabilities

 

 

144,938

 

 

 

(19,600

)

 

 

125,338

 

Noncurrent liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt

 

 

162,346

 

 

 

 

 

 

162,346

 

Accrued insurance

 

 

15,647

 

 

 

 

 

 

15,647

 

Deferred income taxes

 

 

4,199

 

 

 

 

 

 

4,199

 

Other

 

 

26,753

 

 

 

 

 

 

26,753

 

Total noncurrent liabilities

 

 

208,945

 

 

 

 

 

 

208,945

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

 

 

 

 

 

 

Common stock, par value $.01 per share, 60,000 shares authorized, 19,805

   and 19,789 shares issued and outstanding, respectively

 

 

198

 

 

 

 

 

 

198

 

Capital in excess of par value

 

 

369,160

 

 

 

 

 

 

369,160

 

Treasury Stock

 

 

 

 

 

 

 

 

-

 

Accumulated deficit

 

 

(268,820

)

 

 

(20,996

)

(f)

 

(289,816

)

Accumulated other comprehensive loss

 

 

(18,318

)

 

 

 

 

 

(18,318

)

Total Layne Christensen equity

 

 

82,220

 

 

 

(20,996

)

 

 

61,224

 

Noncontrolling interests

 

 

48

 

 

 

 

 

 

48

 

Total equity

 

 

82,268

 

 

 

(20,996

)

 

 

61,272

 

Total liabilities and equity

 

$

436,151

 

 

$

(40,596

)

 

$

395,555

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5

 


L AYNE CHRISTENSEN COMPANY AND SUBSIDIARIES

NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

 

Pro Forma Adjustments

 

(a)

These adjustments reflect the elimination of revenues and expenses of the Heavy Civil business for the year presented.

(b)

This adjustment reflects the Cash Consideration less the estimated working capital adjustment for the disposition of the Heavy Civil business.

(c)

These adjustments reflect the elimination of the Heavy Civil business Purchase and Sale Assets (with Layne retaining Excluded Assets).

(d)

These adjustments reflect the elimination of the Heavy Civil business liabilities that were sold as part of the Asset Purchase Agreement.

(e)

This adjustment also reflects the estimated accrued transaction costs of $1.0 million associated with the sale of the Heavy Civil business.

(f)

This adjustment reflects the estimated loss on the disposition of the Heavy Civil business which is the net impact of Cash Consideration received and assets and liabilities sold.  This consisted of $25.7 million of Heavy Civil business net assets and liabilities at January 31, 2017 plus cash of $10.1 million less estimated working capital adjustment of $4.3 million, less estimated transaction costs of $1.1 million.

 

6

 

Exhibit 99.2

 

 

 

LAYNE CHRISTENSEN  

ANNOUNCES CLOSING OF SALE OF

HEAVY CIVIL BUSINESS

THE WOODLANDS, TEXAS, Monday, May 1, 2017 – Layne Christensen Company (NASDAQ: LAYN) (“Layne” or the “Company”) today announced the closing of the previously disclosed sale of its Heavy Civil business to a newly-formed entity owned by private investors, including members of the current Heavy Civil senior management team, for $10.1 million before an estimated negative working capital adjustment of approximately $4.3 million related to a reduction in working capital since entering into the asset purchase agreement in February.   Net cash proceeds to Layne are expected to be approximately $4.8 million after the working capital adjustment and transaction costs associated with the sale.  The transaction will result in a book loss in the first quarter of fiscal 2018.  The net book value of the Heavy Civil business at the transaction closing date is estimated to be approximately $23 million. Layne expects to use the net proceeds from the sale for general corporate purposes and growth opportunities in its core businesses.

Michael J. Caliel, President and Chief Executive Officer of Layne, commented, “The sale of our Heavy Civil business is consistent with our previously announced strategy to simplify and restructure our operating portfolio and will enable us to concentrate on growing our core water infrastructure businesses, while reducing our overall risk exposure to large construction projects.”  

Stinson Leonard Street LLP acted as exclusive legal advisor, and Houlihan Lokey acted as exclusive financial advisor to Layne on this transaction.

Forward-Looking Statements

 

This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act of 1934. Such statements may include, but are not limited to, statements of plans and objectives, statements of future economic performance and statements of assumptions underlying such statements, and statements of management's intentions, hopes, beliefs, expectations or predictions of the future. Forward-looking statements can often be identified by the use of forward-looking terminology, such as "should," "intend," "continue," "believe," "may," "hope," "anticipate," "goal," "forecast," "plan," "estimate" and similar words or phrases. Such statements are based on current expectations and are subject to certain risks, uncertainties and assumptions, including but not limited to:  prevailing prices for various commodities, unanticipated slowdowns in the Company's major markets, the availability of credit, the risks and uncertainties normally incident to the construction industry, the impact of competition, the effectiveness of operational changes expected to increase efficiency and productivity, worldwide economic and political conditions and foreign currency fluctuations that may affect worldwide results of operations. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially and adversely from those anticipated, estimated or

 


 

 

projected. These forward-looking statements are made as of the date of this filing, and the Company assumes no obligation to update such forward-looking statements or to update the reasons why actual results could differ materially from those anticipated in such forward-looking statements.

About Layne

Layne is a global solutions provider to the world of essential natural resources—water, mineral and energy. We offer innovative, sustainable products and services with an enduring commitment to safety, excellence and integrity.

Contacts

J. Michael Anderson

Chief Financial Officer

281-475-2694

michael.anderson@layne.com

 

Dennard Lascar Associates

Jack Lascar

713-529-6600

jlascar@dennardlascar.com

 

###

 

 

 

2