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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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DELAWARE
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47-2783641
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(State or other Jurisdiction of Incorporation or Organization)
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(I.R.S. Employer Identification No.)
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20 SOUTH VAN BUREN AVENUE
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BARBERTON, OHIO
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44203
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(Address of Principal Executive Offices)
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(Zip Code)
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Large accelerated filer
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x
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Accelerated filer
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¨
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Non-accelerated filer
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¨
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Smaller reporting company
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¨
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Emerging growth company
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¨
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PAGE
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Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||
(in thousands, except per share amounts)
|
2018
|
2017
|
|
2018
|
2017
|
||||||||
Revenues
|
$
|
294,963
|
|
$
|
356,870
|
|
|
$
|
839,476
|
|
$
|
1,011,173
|
|
Costs and expenses:
|
|
|
|
|
|
||||||||
Cost of operations
|
284,501
|
|
326,117
|
|
|
894,249
|
|
1,000,399
|
|
||||
Selling, general and administrative expenses
|
52,266
|
|
50,356
|
|
|
167,012
|
|
164,412
|
|
||||
Goodwill impairment
|
—
|
|
86,903
|
|
|
37,540
|
|
86,903
|
|
||||
Restructuring activities and spin-off transaction costs
|
2,863
|
|
3,664
|
|
|
13,551
|
|
8,648
|
|
||||
Research and development costs
|
452
|
|
1,893
|
|
|
2,881
|
|
6,123
|
|
||||
Loss on asset disposals, net
|
28
|
|
59
|
|
|
1,412
|
|
61
|
|
||||
Total costs and expenses
|
340,110
|
|
468,992
|
|
|
1,116,645
|
|
1,266,546
|
|
||||
Equity in income and impairment of investees
|
—
|
|
1,234
|
|
|
(11,757
|
)
|
(13,380
|
)
|
||||
Operating loss
|
(45,147
|
)
|
(110,888
|
)
|
|
(288,926
|
)
|
(268,753
|
)
|
||||
Other income (expense):
|
|
|
|
|
|
||||||||
Interest income
|
172
|
|
124
|
|
|
432
|
|
361
|
|
||||
Interest expense
|
(10,419
|
)
|
(7,255
|
)
|
|
(35,748
|
)
|
(15,241
|
)
|
||||
Gain on sale of business
|
39,731
|
|
—
|
|
|
39,731
|
|
—
|
|
||||
Loss on debt extinguishment
|
—
|
|
—
|
|
|
(49,241
|
)
|
—
|
|
||||
Benefit plans, net
|
10,756
|
|
5,232
|
|
|
24,839
|
|
14,694
|
|
||||
Foreign exchange
|
(4,939
|
)
|
(6,902
|
)
|
|
(22,680
|
)
|
(4,563
|
)
|
||||
Other – net
|
(45
|
)
|
(241
|
)
|
|
221
|
|
(163
|
)
|
||||
Total other income (expense)
|
35,256
|
|
(9,042
|
)
|
|
(42,446
|
)
|
(4,912
|
)
|
||||
Loss before income tax expense (benefit)
|
(9,891
|
)
|
(119,930
|
)
|
|
(331,372
|
)
|
(273,665
|
)
|
||||
Income tax expense (benefit)
|
94,256
|
|
(5,309
|
)
|
|
99,285
|
|
(4,963
|
)
|
||||
Loss from continuing operations
|
(104,147
|
)
|
(114,621
|
)
|
|
(430,657
|
)
|
(268,702
|
)
|
||||
Income (loss) from discontinued operations, net of tax
|
(1,447
|
)
|
532
|
|
|
(60,875
|
)
|
(3,078
|
)
|
||||
Net loss
|
(105,594
|
)
|
(114,089
|
)
|
|
(491,532
|
)
|
(271,780
|
)
|
||||
Net income attributable to noncontrolling interest
|
(94
|
)
|
(213
|
)
|
|
(357
|
)
|
(566
|
)
|
||||
Net loss attributable to stockholders
|
$
|
(105,688
|
)
|
$
|
(114,302
|
)
|
|
$
|
(491,889
|
)
|
$
|
(272,346
|
)
|
|
|
|
|
|
|
||||||||
Basic and diluted loss per share - continuing operations
|
$
|
(0.62
|
)
|
$
|
(2.49
|
)
|
|
$
|
(3.81
|
)
|
$
|
(5.62
|
)
|
Basic and diluted earnings (loss) per share - discontinued operations
|
(0.01
|
)
|
0.01
|
|
|
(0.54
|
)
|
(0.07
|
)
|
||||
Basic and diluted loss per share
|
$
|
(0.63
|
)
|
$
|
(2.48
|
)
|
|
$
|
(4.35
|
)
|
$
|
(5.69
|
)
|
|
|
|
|
|
|
|
|
|
|
||||
Shares used in the computation of earnings per share:
|
|
|
|
|
|
||||||||
Basic and diluted
|
168,677
|
|
46,149
|
|
|
113,147
|
|
47,905
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||
(in thousands)
|
2018
|
2017
|
|
2018
|
2017
|
||||||||
Net loss
|
$
|
(105,594
|
)
|
$
|
(114,089
|
)
|
|
$
|
(491,532
|
)
|
$
|
(271,780
|
)
|
Other comprehensive income:
|
|
|
|
|
|
||||||||
Currency translation adjustments (CTA), net of taxes
|
296
|
|
2,591
|
|
|
12,036
|
|
14,765
|
|
||||
|
|
|
|
|
|
||||||||
Reclassification of CTA to net loss
|
2,595
|
|
—
|
|
|
551
|
|
—
|
|
||||
|
|
|
|
|
|
||||||||
Derivative financial instruments:
|
|
|
|
|
|
||||||||
Unrealized losses on derivative financial instruments
|
103
|
|
398
|
|
|
1,102
|
|
2,642
|
|
||||
Income tax (expense) benefit
|
(47
|
)
|
130
|
|
|
241
|
|
(9
|
)
|
||||
Unrealized losses on derivative financial instruments, net of taxes
|
150
|
|
268
|
|
|
861
|
|
2,651
|
|
||||
Derivative financial instrument (gains) losses reclassified into net income
|
(502
|
)
|
5,679
|
|
|
(1,641
|
)
|
(769
|
)
|
||||
Income tax (expense) benefit
|
(110
|
)
|
2,112
|
|
|
(358
|
)
|
165
|
|
||||
Reclassification adjustment for (gains) losses included in net loss, net of taxes
|
(392
|
)
|
3,567
|
|
|
(1,283
|
)
|
(934
|
)
|
||||
|
|
|
|
|
|
||||||||
Benefit obligations:
|
|
|
|
|
|
||||||||
Unrealized gains (losses) on benefit obligations
|
(11
|
)
|
(66
|
)
|
|
46
|
|
(207
|
)
|
||||
|
|
|
|
|
|
||||||||
Amortization of benefit plan benefits
|
(168
|
)
|
(619
|
)
|
|
(1,918
|
)
|
(2,281
|
)
|
||||
Income tax (expense) benefit
|
(46
|
)
|
11
|
|
|
1,846
|
|
31
|
|
||||
Amortization of benefit plan benefits, net of taxes
|
(122
|
)
|
(630
|
)
|
|
(3,764
|
)
|
(2,312
|
)
|
||||
|
|
|
|
|
|
||||||||
Other
|
—
|
|
65
|
|
|
(38
|
)
|
79
|
|
||||
|
|
|
|
|
|
||||||||
Other comprehensive income
|
2,516
|
|
5,795
|
|
|
8,409
|
|
14,042
|
|
||||
Total comprehensive loss
|
(103,078
|
)
|
(108,294
|
)
|
|
(483,123
|
)
|
(257,738
|
)
|
||||
Comprehensive income (loss) attributable to noncontrolling interest
|
23
|
|
(59
|
)
|
|
(175
|
)
|
(85
|
)
|
||||
Comprehensive loss attributable to stockholders
|
$
|
(103,055
|
)
|
$
|
(108,353
|
)
|
|
$
|
(483,298
|
)
|
$
|
(257,823
|
)
|
(in thousands, except per share amount)
|
September 30, 2018
|
December 31, 2017
|
||||
Cash and cash equivalents
|
$
|
32,483
|
|
$
|
43,717
|
|
Restricted cash and cash equivalents
|
19,689
|
|
25,980
|
|
||
Accounts receivable – trade, net
|
206,368
|
|
252,508
|
|
||
Accounts receivable – other
|
58,562
|
|
78,813
|
|
||
Contracts in progress
|
141,573
|
|
135,811
|
|
||
Inventories
|
64,655
|
|
72,917
|
|
||
Other current assets
|
36,868
|
|
34,039
|
|
||
Current assets of discontinued operations
|
90,167
|
|
88,472
|
|
||
Total current assets
|
650,365
|
|
732,257
|
|
||
Net property, plant and equipment
|
96,926
|
|
114,707
|
|
||
Goodwill
|
47,213
|
|
85,678
|
|
||
Deferred income taxes
|
—
|
|
97,467
|
|
||
Investments in unconsolidated affiliates
|
735
|
|
43,278
|
|
||
Intangible assets
|
35,102
|
|
42,065
|
|
||
Other assets
|
29,715
|
|
25,741
|
|
||
Noncurrent assets of discontinued operations
|
109,296
|
|
181,036
|
|
||
Total assets
|
$
|
969,352
|
|
$
|
1,322,229
|
|
|
|
|
||||
Foreign revolving credit facilities
|
$
|
3,415
|
|
$
|
9,173
|
|
Second lien term loan facility
|
—
|
|
160,141
|
|
||
Accounts payable
|
194,668
|
|
205,396
|
|
||
Accrued employee benefits
|
25,569
|
|
27,058
|
|
||
Advance billings on contracts
|
127,845
|
|
171,997
|
|
||
Accrued warranty expense
|
52,164
|
|
33,514
|
|
||
Other accrued liabilities
|
83,219
|
|
89,549
|
|
||
Current liabilities of discontinued operations
|
56,527
|
|
47,499
|
|
||
Total current liabilities
|
543,407
|
|
744,327
|
|
||
U.S. revolving credit facility
|
190,600
|
|
94,300
|
|
||
Last out term loan
|
20,029
|
|
—
|
|
||
Pension and other accumulated postretirement benefit liabilities
|
216,971
|
|
250,002
|
|
||
Other noncurrent liabilities
|
36,973
|
|
29,897
|
|
||
Noncurrent liabilities of discontinued operations
|
8,127
|
|
13,000
|
|
||
Total liabilities
|
1,016,107
|
|
1,131,526
|
|
||
Commitments and contingencies
|
|
|
||||
Stockholders' (deficit) equity:
|
|
|
||||
Common stock, par value $0.01 per share, authorized 200,000 shares; issued and outstanding 168,681 and 44,065 shares at September 30, 2018 and December 31, 2017, respectively
|
1,747
|
|
499
|
|
||
Capital in excess of par value
|
1,046,805
|
|
800,968
|
|
||
Treasury stock at cost, 5,839 and 5,681 shares at September 30, 2018 and December 31, 2017, respectively
|
(105,551
|
)
|
(104,785
|
)
|
||
Accumulated deficit
|
(984,511
|
)
|
(492,150
|
)
|
||
Accumulated other comprehensive loss
|
(14,020
|
)
|
(22,429
|
)
|
||
Stockholders' (deficit) equity attributable to shareholders
|
(55,530
|
)
|
182,103
|
|
||
Noncontrolling interest
|
8,775
|
|
8,600
|
|
||
Total stockholders' (deficit) equity
|
(46,755
|
)
|
190,703
|
|
||
Total liabilities and stockholders' (deficit) equity
|
$
|
969,352
|
|
$
|
1,322,229
|
|
|
|
Nine months ended September 30,
|
|||||
(in thousands)
|
|
2018
|
2017
|
||||
Cash flows from operating activities:
|
|
|
|||||
Net loss
|
|
$
|
(491,532
|
)
|
$
|
(271,780
|
)
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
|
|
|
|
||||
Depreciation and amortization of long-lived assets
|
|
24,487
|
|
31,037
|
|
||
Amortization of debt issuance costs, debt discount and payment-in-kind interest
|
|
10,121
|
|
3,190
|
|
||
Gain on sale of business
|
|
(39,731
|
)
|
—
|
|
||
Loss on debt extinguishment
|
|
49,241
|
|
—
|
|
||
Goodwill impairment of discontinued operations
|
|
72,309
|
|
—
|
|
||
Goodwill impairment
|
|
37,540
|
|
86,903
|
|
||
Income from equity method investees
|
|
(6,605
|
)
|
(4,813
|
)
|
||
Other than temporary impairment of equity method investment in TBWES
|
|
18,362
|
|
18,193
|
|
||
Losses on asset disposals and impairments
|
|
1,922
|
|
543
|
|
||
Reserve for claims receivable
|
|
15,523
|
|
—
|
|
||
Provision for (benefit from) deferred income taxes, including valuation allowances
|
|
97,707
|
|
(2,100
|
)
|
||
Mark to market gains and prior service cost amortization for pension and postretirement plans
|
|
(6,612
|
)
|
(1,219
|
)
|
||
Stock-based compensation, net of associated income taxes
|
|
2,002
|
|
8,523
|
|
||
Changes in assets and liabilities
|
|
|
|
||||
Accounts receivable
|
|
45,379
|
|
1,375
|
|
||
Contracts in progress and advance billings on contracts
|
|
(41,243
|
)
|
6,682
|
|
||
Inventories
|
|
5,197
|
|
2,717
|
|
||
Income taxes
|
|
(6,866
|
)
|
9,196
|
|
||
Accounts payable
|
|
(12,305
|
)
|
5,514
|
|
||
Accrued and other current liabilities
|
|
30,246
|
|
(16,011
|
)
|
||
Pension liabilities, accrued postretirement benefits and employee benefits
|
|
(29,329
|
)
|
(27,960
|
)
|
||
Other, net
|
|
10,695
|
|
(781
|
)
|
||
Net cash from operating activities
|
|
(213,492
|
)
|
(150,791
|
)
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchase of property, plant and equipment
|
|
(5,019
|
)
|
(10,666
|
)
|
||
Acquisition of business, net of cash acquired
|
|
—
|
|
(52,547
|
)
|
||
Proceeds from sale of businesses, net of cash sold
|
|
43,920
|
|
—
|
|
||
Proceeds from sale of equity method investments in joint ventures
|
|
28,764
|
|
—
|
|
||
Purchases of available-for-sale securities
|
|
(17,823
|
)
|
(22,900
|
)
|
||
Sales and maturities of available-for-sale securities
|
|
18,216
|
|
27,021
|
|
||
Other, net
|
|
(379
|
)
|
61
|
|
||
Net cash from investing activities
|
|
67,679
|
|
(59,031
|
)
|
|
|
Nine months ended September 30,
|
|||||
(in thousands)
|
|
2018
|
2017
|
||||
Cash flows from financing activities:
|
|
|
|
||||
Borrowings under our U.S. revolving credit facility
|
|
446,400
|
|
511,423
|
|
||
Repayments of our U.S. revolving credit facility
|
|
(350,100
|
)
|
(462,323
|
)
|
||
Borrowings under our last out term loan
|
|
20,000
|
|
—
|
|
||
Proceeds from our second lien term loan facility, net of $34.2 million discount
|
|
—
|
|
141,674
|
|
||
Repayments of our second lien term loan facility
|
|
(212,590
|
)
|
—
|
|
||
Repayments of our foreign revolving credit facilities
|
|
(5,607
|
)
|
(3,313
|
)
|
||
Common stock repurchase from related party
|
|
—
|
|
(16,674
|
)
|
||
Proceeds from rights offering
|
|
247,132
|
|
—
|
|
||
Costs related to rights offering
|
|
(3,286
|
)
|
—
|
|
||
Debt issuance costs
|
|
(8,080
|
)
|
(14,025
|
)
|
||
Issuance of common stock
|
|
1,243
|
|
—
|
|
||
Shares of our common stock returned to treasury stock
|
|
(766
|
)
|
(927
|
)
|
||
Other, net
|
|
(6
|
)
|
(298
|
)
|
||
Net cash from financing activities
|
|
134,340
|
|
155,537
|
|
||
Effects of exchange rate changes on cash
|
|
(1,356
|
)
|
5,413
|
|
||
Net decrease in cash, cash equivalents and restricted cash
|
|
(12,829
|
)
|
(48,872
|
)
|
||
Less net increase (decrease) in cash and cash equivalents of discontinued operations
|
|
4,696
|
|
2,263
|
|
||
Net decrease in cash, cash equivalents and restricted cash of continuing operations
|
|
(17,525
|
)
|
(51,135
|
)
|
||
Cash, cash equivalents and restricted cash of continuing operations, beginning of period
|
|
69,697
|
|
115,196
|
|
||
Cash, cash equivalents and restricted cash of continuing operations, end of period
|
|
$
|
52,172
|
|
$
|
64,061
|
|
•
|
raised gross proceeds of
$248.4 million
on April 30, 2018 through the rights offering as described in
Note 20
(the "Rights Offering");
|
•
|
repaid on May 4, 2018 the Second Lien Term Loan Facility described in
Note 19
that had been in default beginning March 1, 2018;
|
•
|
completed the sale of our MEGTEC and Universal businesses on October 5, 2018, for
$130 million
, subject to adjustment, resulting in receipt of
$115.0 million
in cash, net of
$19.5 million
in cash sold with the businesses, and
$7.7 million
that was deposited in escrow pending final settlement of working capital and other customary matters;
|
•
|
completed the sale of Palm Beach Resource Recovery Corporation ("PBRRC"), a subsidiary that held
two
operations and maintenance contracts for waste-to-energy facilities in West Palm Beach, Florida, on September 17, 2018 for
$45 million
subject to adjustment, resulting in receipt of
$38.8 million
in cash and
$4.9 million
, which was deposited in escrow pending final settlement of working capital and other customary matters;
|
•
|
sold our equity method investments in Babcock & Wilcox Beijing Company, Ltd. ("BWBC"), a joint venture in China, and Thermax Babcock & Wilcox Energy Solutions Private Limited ("TBWES"), a joint venture in India, and settled related contractual claims, resulting in proceeds of
$21.1 million
in the second quarter of 2018 and
$15.0 million
in the third quarter of 2018, respectively;
|
•
|
sold another non-core business for
$5.1 million
in the first quarter of 2018;
|
•
|
initiated restructuring actions and other additional cost reductions in the second quarter of 2018 that are designed to save approximately
$38 million
annually;
|
•
|
received
$20 million
in net proceeds from the Last Out Term Loan, described in
Note 18
, from B. Riley FBR, Inc., a related party, during the third quarter of 2018 and another
$10 million
in net proceeds from the Last Out Term Loan from the same lender in October 2018; and
|
•
|
entered into several waivers and amendments to avoid default under our U.S. Revolving Credit Facility as described in Note 17 to the condensed consolidated financial statements, the most recent of which is dated October 31, 2018. As part of this latest amendment, our lenders agreed to: (1) extend the deadline to obtain written concessions from customers in an amount of at least $25.0 million to February 15, 2019; (2) change the interest coverage and senior leverage financial covenant ratios; (3) amend the definition of EBITDA to allow certain add-back adjustments
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||
(in thousands, except per share amounts)
|
2018
|
2017
|
|
2018
|
2017
|
||||||||
Loss from continuing operations
|
$
|
(104,241
|
)
|
$
|
(114,834
|
)
|
|
$
|
(431,014
|
)
|
$
|
(269,268
|
)
|
Income (loss) from discontinued operations, net of tax
|
(1,447
|
)
|
532
|
|
|
(60,875
|
)
|
(3,078
|
)
|
||||
Net loss attributable to shareholders
|
$
|
(105,688
|
)
|
$
|
(114,302
|
)
|
|
$
|
(491,889
|
)
|
$
|
(272,346
|
)
|
|
|
|
|
|
|
||||||||
Weighted average shares used to calculate basic and diluted earnings per share
|
168,677
|
|
46,149
|
|
|
113,147
|
|
47,905
|
|
||||
|
|
|
|
|
|
||||||||
Basic and diluted loss per share - continuing operations
|
$
|
(0.62
|
)
|
$
|
(2.49
|
)
|
|
$
|
(3.81
|
)
|
$
|
(5.62
|
)
|
Basic and diluted earnings (loss) per share - discontinued operations
|
(0.01
|
)
|
0.01
|
|
|
(0.54
|
)
|
(0.07
|
)
|
||||
Basic and diluted loss per share
|
$
|
(0.63
|
)
|
$
|
(2.48
|
)
|
|
$
|
(4.35
|
)
|
$
|
(5.69
|
)
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||
(in thousands)
|
2018
|
2017
|
|
2018
|
2017
|
||||||||
Revenue
|
$
|
50,969
|
|
$
|
51,833
|
|
|
$
|
167,408
|
|
$
|
138,463
|
|
Cost of operations
|
40,597
|
|
40,504
|
|
|
130,785
|
|
109,601
|
|
||||
Selling, general and administrative
|
9,220
|
|
9,885
|
|
|
26,244
|
|
31,329
|
|
||||
Goodwill impairment
|
—
|
|
—
|
|
|
72,309
|
|
—
|
|
||||
Restructuring charge
|
—
|
|
111
|
|
|
—
|
|
262
|
|
||||
Research and development
|
424
|
|
398
|
|
|
1,180
|
|
1,331
|
|
||||
Loss (gain) on asset disposals
|
(2,234
|
)
|
—
|
|
|
(2,234
|
)
|
2
|
|
||||
Operating income (loss)
|
2,962
|
|
935
|
|
|
(60,877
|
)
|
(4,062
|
)
|
||||
Net income (loss)
|
(1,447
|
)
|
532
|
|
|
(60,875
|
)
|
(3,078
|
)
|
(in thousands)
|
September 30, 2018
|
December 31, 2017
|
||||
Cash and cash equivalents
|
$
|
17,646
|
|
$
|
12,950
|
|
Accounts receivable – trade, net
|
36,428
|
|
39,196
|
|
||
Accounts receivable – other
|
1,873
|
|
157
|
|
||
Contracts in progress
|
20,403
|
|
25,409
|
|
||
Inventories
|
8,959
|
|
9,245
|
|
||
Other current assets
|
4,858
|
|
1,515
|
|
||
Current assets of discontinued operations
|
90,167
|
|
88,472
|
|
||
Net property, plant and equipment
|
26,365
|
|
27,224
|
|
||
Goodwill
|
46,411
|
|
118,720
|
|
||
Deferred income taxes
|
1,882
|
|
359
|
|
||
Intangible assets
|
32,364
|
|
34,715
|
|
||
Other assets
|
2,274
|
|
18
|
|
||
Noncurrent assets of discontinued operations
|
109,296
|
|
181,036
|
|
||
Total assets of discontinued operations
|
$
|
199,463
|
|
$
|
269,508
|
|
|
|
|
||||
Accounts payable
|
$
|
13,673
|
|
$
|
19,838
|
|
Accrued employee benefits
|
4,324
|
|
3,095
|
|
||
Advance billings on contracts
|
10,199
|
|
9,073
|
|
||
Accrued warranty expense
|
4,928
|
|
5,506
|
|
||
Other accrued liabilities
|
23,403
|
|
9,987
|
|
||
Current liabilities of discontinued operations
|
56,527
|
|
47,499
|
|
||
Pension and other accumulated postretirement benefit liabilities
|
6,294
|
|
6,388
|
|
||
Other noncurrent liabilities
|
1,833
|
|
6,612
|
|
||
Noncurrent liabilities of discontinued operations
|
8,127
|
|
13,000
|
|
||
Total liabilities of discontinued operations
|
$
|
64,654
|
|
$
|
60,499
|
|
|
Nine months ended September 30,
|
|||||
(in thousands)
|
2018
|
2017
|
||||
Depreciation and amortization
|
$
|
3,482
|
|
$
|
7,633
|
|
Goodwill impairment
|
72,309
|
|
—
|
|
||
Loss (gain) on asset disposals
|
(2,234
|
)
|
2
|
|
||
Benefit from deferred income taxes
|
(974
|
)
|
(282
|
)
|
||
Purchase of property, plant equipment
|
(77
|
)
|
(888
|
)
|
||
Acquisition of Universal, net of cash acquired
|
—
|
|
(52,547
|
)
|
•
|
Power segment
:
focused on the supply of and aftermarket services for steam-generating, environmental and auxiliary equipment for power generation and other industrial applications.
|
•
|
Renewable segment
:
focused on the supply of steam-generating systems, environmental and auxiliary equipment and operations and maintenance services for the waste-to-energy and biomass power generation industries.
|
•
|
Industrial segment
:
focused on the supply of custom-engineered cooling systems for steam applications along with related aftermarket services.
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||
(in thousands)
|
2018
|
2017
|
|
2018
|
2017
|
||||||||
Revenues:
|
|
|
|
|
|
||||||||
Power segment
|
|
|
|
|
|
||||||||
Retrofits
|
$
|
52,366
|
|
$
|
78,684
|
|
|
$
|
183,693
|
|
$
|
222,128
|
|
New build utility and environmental
|
38,039
|
|
25,764
|
|
|
93,080
|
|
123,314
|
|
||||
Aftermarket parts and field engineering services
|
67,678
|
|
64,456
|
|
|
204,050
|
|
202,037
|
|
||||
Industrial steam generation
|
41,143
|
|
38,624
|
|
|
84,513
|
|
103,437
|
|
||||
Eliminations
|
(8,176
|
)
|
(5,306
|
)
|
|
(17,408
|
)
|
(38,642
|
)
|
||||
|
191,050
|
|
202,222
|
|
|
547,928
|
|
612,274
|
|
||||
Renewable segment
|
|
|
|
|
|
||||||||
Renewable new build and services
|
62,834
|
|
93,154
|
|
|
147,622
|
|
214,156
|
|
||||
Operations and maintenance services
|
14,278
|
|
15,403
|
|
|
44,450
|
|
48,011
|
|
||||
Eliminations
|
(628
|
)
|
—
|
|
|
(628
|
)
|
—
|
|
||||
|
76,484
|
|
108,557
|
|
|
191,444
|
|
262,167
|
|
||||
Industrial segment
|
|
|
|
|
|
||||||||
New build cooling systems
|
26,852
|
|
34,354
|
|
|
89,596
|
|
101,260
|
|
||||
Aftermarket cooling system services
|
7,997
|
|
13,100
|
|
|
28,012
|
|
42,011
|
|
||||
|
34,849
|
|
47,454
|
|
|
117,608
|
|
143,271
|
|
||||
|
|
|
|
|
|
||||||||
Eliminations
|
(7,420
|
)
|
(1,363
|
)
|
|
(17,504
|
)
|
(6,539
|
)
|
||||
|
$
|
294,963
|
|
$
|
356,870
|
|
|
$
|
839,476
|
|
$
|
1,011,173
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||
(in thousands)
|
2018
|
2017
|
|
2018
|
2017
|
||||||||
Gross profit (loss)
(1)
:
|
|
|
|
|
|
||||||||
Power segment
|
$
|
34,313
|
|
$
|
35,390
|
|
|
$
|
95,189
|
|
$
|
116,952
|
|
Renewable segment
|
(17,120
|
)
|
181
|
|
|
(136,898
|
)
|
(100,119
|
)
|
||||
Industrial segment
|
(5,524
|
)
|
(2,556
|
)
|
|
(8,196
|
)
|
2,330
|
|
||||
Intangible amortization expense included in cost of operations
|
(1,207
|
)
|
(2,262
|
)
|
|
(4,868
|
)
|
(8,389
|
)
|
||||
|
10,462
|
|
30,753
|
|
|
(54,773
|
)
|
10,774
|
|
||||
|
|
|
|
|
|
||||||||
Selling, general and administrative ("SG&A") expenses
|
(44,887
|
)
|
(49,871
|
)
|
|
(151,007
|
)
|
(163,723
|
)
|
||||
Financial advisory services included in SG&A
|
(7,244
|
)
|
(358
|
)
|
|
(15,475
|
)
|
(358
|
)
|
||||
Intangible amortization expense included in SG&A
|
(135
|
)
|
(127
|
)
|
|
(530
|
)
|
(331
|
)
|
||||
Goodwill impairment
|
—
|
|
(86,903
|
)
|
|
(37,540
|
)
|
(86,903
|
)
|
||||
Restructuring activities and spin-off transaction costs
|
(2,863
|
)
|
(3,664
|
)
|
|
(13,551
|
)
|
(8,648
|
)
|
||||
Research and development costs
|
(452
|
)
|
(1,893
|
)
|
|
(2,881
|
)
|
(6,123
|
)
|
||||
Loss on asset disposals, net
|
(28
|
)
|
(59
|
)
|
|
(1,412
|
)
|
(61
|
)
|
||||
Equity in income and impairment of investees
|
—
|
|
1,234
|
|
|
(11,757
|
)
|
(13,380
|
)
|
||||
Operating loss
|
$
|
(45,147
|
)
|
$
|
(110,888
|
)
|
|
$
|
(288,926
|
)
|
$
|
(268,753
|
)
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||
(in thousands)
|
2018
|
2017
|
|
2018
|
2017
|
||||||||
Adjusted EBITDA
|
|
|
|
|
|
|
|
|
|
||||
Power segment
(1)
|
$
|
21,911
|
|
$
|
21,624
|
|
|
$
|
49,524
|
|
$
|
66,434
|
|
Renewable segment
|
(25,831
|
)
|
(10,648
|
)
|
|
(166,188
|
)
|
(133,023
|
)
|
||||
Industrial segment
|
(11,212
|
)
|
(7,609
|
)
|
|
(24,744
|
)
|
(12,994
|
)
|
||||
Corporate
(2)
|
(5,793
|
)
|
(8,775
|
)
|
|
(23,601
|
)
|
(28,168
|
)
|
||||
Research and development costs
|
(452
|
)
|
(1,893
|
)
|
|
(2,881
|
)
|
(6,123
|
)
|
||||
Foreign exchange
|
(4,939
|
)
|
(6,902
|
)
|
|
(22,680
|
)
|
(4,563
|
)
|
||||
Other – net
|
(45
|
)
|
(241
|
)
|
|
221
|
|
(163
|
)
|
||||
|
(26,361
|
)
|
(14,444
|
)
|
|
(190,349
|
)
|
(118,600
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
||||
Gain on sale of business
|
39,731
|
|
—
|
|
|
39,731
|
|
—
|
|
||||
Gain on sale of equity method investment (BWBC)
|
—
|
|
—
|
|
|
6,509
|
|
—
|
|
||||
Impairment of equity method investment in TBWES
|
—
|
|
—
|
|
|
(18,362
|
)
|
(18,193
|
)
|
||||
Loss on debt extinguishment
|
—
|
|
—
|
|
|
(49,241
|
)
|
—
|
|
||||
Loss on asset disposal
|
—
|
|
(61
|
)
|
|
(1,513
|
)
|
(61
|
)
|
||||
MTM gain (loss) from benefit plans
|
4,196
|
|
—
|
|
|
4,740
|
|
(1,062
|
)
|
||||
Financial advisory services
|
(7,244
|
)
|
(358
|
)
|
|
(15,475
|
)
|
(358
|
)
|
||||
Acquisition and integration costs included in SG&A
|
—
|
|
(141
|
)
|
|
—
|
|
(1,573
|
)
|
||||
Goodwill impairment
|
—
|
|
(86,903
|
)
|
|
(37,540
|
)
|
(86,903
|
)
|
||||
Restructuring activities and spin-off transaction costs
|
(2,863
|
)
|
(3,664
|
)
|
|
(13,551
|
)
|
(8,648
|
)
|
||||
Depreciation & amortization
|
(7,103
|
)
|
(7,228
|
)
|
|
(21,005
|
)
|
(23,387
|
)
|
||||
Interest expense, net
|
(10,247
|
)
|
(7,131
|
)
|
|
(35,316
|
)
|
(14,880
|
)
|
||||
Loss before income tax expense
|
(9,891
|
)
|
(119,930
|
)
|
|
(331,372
|
)
|
(273,665
|
)
|
||||
Income tax expense (benefit)
|
94,256
|
|
(5,309
|
)
|
|
99,285
|
|
(4,963
|
)
|
||||
Loss from continuing operations
|
(104,147
|
)
|
(114,621
|
)
|
|
(430,657
|
)
|
(268,702
|
)
|
||||
Income (loss) from discontinued operations, net of tax
|
(1,447
|
)
|
532
|
|
|
(60,875
|
)
|
(3,078
|
)
|
||||
Net loss
|
(105,594
|
)
|
(114,089
|
)
|
|
(491,532
|
)
|
(271,780
|
)
|
||||
Net income attributable to noncontrolling interest
|
(94
|
)
|
(213
|
)
|
|
(357
|
)
|
(566
|
)
|
||||
Net loss attributable to stockholders
|
$
|
(105,688
|
)
|
$
|
(114,302
|
)
|
|
$
|
(491,889
|
)
|
$
|
(272,346
|
)
|
|
September 30,
|
December 31,
|
||||
(in thousands)
|
2018
|
2017
|
||||
Contract assets - included in contracts in progress:
|
|
|
||||
Costs incurred less costs of revenue recognized
|
$
|
51,083
|
|
$
|
69,576
|
|
Revenues recognized less billings to customers
|
90,490
|
|
66,235
|
|
||
Contracts in progress
|
$
|
141,573
|
|
$
|
135,811
|
|
Contract liabilities - included in advance billings on contracts:
|
|
|
||||
Billings to customers less revenues recognized
|
$
|
124,973
|
|
$
|
168,880
|
|
Costs of revenue recognized less cost incurred
|
2,872
|
|
3,117
|
|
||
Advance billings on contracts
|
$
|
127,845
|
|
$
|
171,997
|
|
|
|
|
||||
Accrued contract losses
|
$
|
40,362
|
|
$
|
40,634
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||
(in thousands)
|
2018
|
2017
|
|
2018
|
2017
|
||||||||
Increases in gross profits for changes in estimates for over time contracts
|
$
|
2,326
|
|
$
|
3,040
|
|
|
$
|
16,182
|
|
$
|
15,777
|
|
Decreases in gross profits for changes in estimates for over time contracts
|
(26,583
|
)
|
(12,312
|
)
|
|
(136,992
|
)
|
(135,445
|
)
|
||||
Net changes in gross profits for changes in estimates for over time contracts
|
$
|
(24,257
|
)
|
$
|
(9,272
|
)
|
|
$
|
(120,810
|
)
|
$
|
(119,668
|
)
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||
(in thousands)
|
2018
|
2017
|
|
2018
|
2017
|
||||||||
Balance at beginning of period
|
$
|
7,882
|
|
$
|
838
|
|
|
$
|
2,320
|
|
$
|
1,809
|
|
Restructuring expense
|
2,849
|
|
3,166
|
|
|
13,013
|
|
7,023
|
|
||||
Payments
|
(3,113
|
)
|
(2,188
|
)
|
|
(7,715
|
)
|
(7,016
|
)
|
||||
Balance at September 30
|
$
|
7,618
|
|
$
|
1,816
|
|
|
$
|
7,618
|
|
$
|
1,816
|
|
(in thousands)
|
Currency translation gain (loss)
|
Net unrealized gain (loss) on investments (net of tax)
1
|
Net unrealized gain (loss) on derivative instruments
|
Net unrecognized gain (loss) related to benefit plans (net of tax)
|
Total
|
||||||||||
Balance at December 31, 2017
|
$
|
(27,837
|
)
|
$
|
38
|
|
$
|
1,737
|
|
$
|
3,633
|
|
$
|
(22,429
|
)
|
Impact of ASU 2016-1 on changes in the components of AOCI, net of tax
(1)
|
—
|
|
(38
|
)
|
—
|
|
—
|
|
(38
|
)
|
|||||
Other comprehensive income (loss) before reclassifications
|
3,223
|
|
—
|
|
1,224
|
|
(55
|
)
|
4,392
|
|
|||||
Amounts reclassified from AOCI to net income (loss)
|
(2,044
|
)
|
—
|
|
(1,272
|
)
|
(384
|
)
|
(3,700
|
)
|
|||||
Net current-period other comprehensive income (loss)
|
1,179
|
|
(38
|
)
|
(48
|
)
|
(439
|
)
|
654
|
|
|||||
Balance at March 31, 2018
|
$
|
(26,658
|
)
|
$
|
—
|
|
$
|
1,689
|
|
$
|
3,194
|
|
$
|
(21,775
|
)
|
Other comprehensive income (loss) before reclassifications
|
8,517
|
|
—
|
|
(513
|
)
|
112
|
|
8,116
|
|
|||||
Amounts reclassified from AOCI to net income (loss)
|
—
|
|
—
|
|
381
|
|
(427
|
)
|
(46
|
)
|
|||||
Amounts reclassified from AOCI to pension, other accumulated postretirement benefit liabilities and deferred income taxes
(2)
|
—
|
|
—
|
|
—
|
|
(2,831
|
)
|
(2,831
|
)
|
|||||
Net current-period other comprehensive income (loss)
|
8,517
|
|
—
|
|
(132
|
)
|
(3,146
|
)
|
5,239
|
|
|||||
Balance at June 30, 2018
|
$
|
(18,141
|
)
|
$
|
—
|
|
$
|
1,557
|
|
$
|
48
|
|
$
|
(16,536
|
)
|
Other comprehensive income (loss) before reclassifications
|
296
|
|
—
|
|
150
|
|
(11
|
)
|
435
|
|
|||||
Amounts reclassified from AOCI to net income (loss)
|
2,595
|
|
—
|
|
(392
|
)
|
(122
|
)
|
2,081
|
|
|||||
Net current-period other comprehensive income (loss)
|
2,891
|
|
—
|
|
(242
|
)
|
(133
|
)
|
2,516
|
|
|||||
Balance at September 30, 2018
|
$
|
(15,250
|
)
|
$
|
—
|
|
$
|
1,315
|
|
$
|
(85
|
)
|
$
|
(14,020
|
)
|
(in thousands)
|
Currency translation gain (loss)
|
Net unrealized gain (loss) on investments (net of tax)
|
Net unrealized gain (loss) on derivative instruments
|
Net unrecognized gain (loss) related to benefit plans (net of tax)
|
Total
|
||||||||||
Balance at December 31, 2016
|
$
|
(43,987
|
)
|
$
|
(37
|
)
|
$
|
802
|
|
$
|
6,740
|
|
$
|
(36,482
|
)
|
Other comprehensive income (loss) before reclassifications
|
5,417
|
|
61
|
|
4,587
|
|
(44
|
)
|
10,021
|
|
|||||
Amounts reclassified from AOCI to net income (loss)
|
—
|
|
(27
|
)
|
(3,843
|
)
|
(882
|
)
|
(4,752
|
)
|
|||||
Net current-period other comprehensive income (loss)
|
5,417
|
|
34
|
|
744
|
|
(926
|
)
|
5,269
|
|
|||||
Balance at March 31, 2017
|
$
|
(38,570
|
)
|
$
|
(3
|
)
|
$
|
1,546
|
|
$
|
5,814
|
|
$
|
(31,213
|
)
|
Other comprehensive income (loss) before reclassifications
|
6,757
|
|
(19
|
)
|
(2,204
|
)
|
(97
|
)
|
4,437
|
|
|||||
Amounts reclassified from AOCI to net income (loss)
|
—
|
|
(1
|
)
|
(658
|
)
|
(800
|
)
|
(1,459
|
)
|
|||||
Net current-period other comprehensive income (loss)
|
6,757
|
|
(20
|
)
|
(2,862
|
)
|
(897
|
)
|
2,978
|
|
|||||
Balance at June 30, 2017
|
$
|
(31,813
|
)
|
$
|
(23
|
)
|
$
|
(1,316
|
)
|
$
|
4,917
|
|
$
|
(28,235
|
)
|
Other comprehensive income (loss) before reclassifications
|
2,591
|
|
69
|
|
268
|
|
(66
|
)
|
2,862
|
|
|||||
Amounts reclassified from AOCI to net income (loss)
|
—
|
|
(4
|
)
|
3,567
|
|
(630
|
)
|
2,933
|
|
|||||
Net current-period other comprehensive income (loss)
|
2,591
|
|
65
|
|
3,835
|
|
(696
|
)
|
5,795
|
|
|||||
Balance at September 30, 2017
|
$
|
(29,222
|
)
|
$
|
42
|
|
$
|
2,519
|
|
$
|
4,221
|
|
$
|
(22,440
|
)
|
(in thousands)
|
September 30, 2018
|
December 31, 2017
|
||||
Raw materials and supplies
|
$
|
47,047
|
|
$
|
54,291
|
|
Work in progress
|
6,276
|
|
6,918
|
|
||
Finished goods
|
11,332
|
|
11,708
|
|
||
Total inventories
|
$
|
64,655
|
|
$
|
72,917
|
|
(in thousands)
|
Power
|
|
Renewable
|
|
Industrial
(1)
|
|
Total
|
||||||||
Balance at December 31, 2017
(2)
|
$
|
47,370
|
|
|
$
|
—
|
|
|
$
|
38,308
|
|
|
$
|
85,678
|
|
Currency translation adjustments
|
(157
|
)
|
|
—
|
|
|
(768
|
)
|
|
(925
|
)
|
||||
2018 impairment charges
|
—
|
|
|
—
|
|
|
(37,540
|
)
|
|
(37,540
|
)
|
||||
Balance at September 30, 2018
(2)
|
$
|
47,213
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
47,213
|
|
(in thousands)
|
Power
|
|
Renewable
|
|
Industrial
(1)
|
|
Total
|
||||||||
Balance at December 31, 2016
|
$
|
46,220
|
|
|
$
|
48,435
|
|
|
$
|
68,432
|
|
|
$
|
163,087
|
|
Currency translation adjustments
|
1,180
|
|
|
1,530
|
|
|
6,491
|
|
|
9,201
|
|
||||
2017 impairment charges
|
—
|
|
|
(49,965
|
)
|
|
(36,938
|
)
|
|
(86,903
|
)
|
||||
Balance at September 30, 2017
(2)
|
$
|
47,400
|
|
|
$
|
—
|
|
|
$
|
37,985
|
|
|
$
|
85,385
|
|
(in thousands)
|
September 30, 2018
|
December 31, 2017
|
||||
Definite-lived intangible assets
(1)
|
|
|
||||
Customer relationships
|
$
|
25,000
|
|
$
|
25,494
|
|
Unpatented technology
|
15,166
|
|
12,910
|
|
||
Patented technology
|
2,632
|
|
6,542
|
|
||
Tradename
|
12,636
|
|
13,951
|
|
||
Backlog
|
17,760
|
|
18,060
|
|
||
All other
|
9,809
|
|
7,611
|
|
||
Gross value of definite-lived intangible assets
|
83,003
|
|
84,568
|
|
||
Customer relationships amortization
|
(14,167
|
)
|
(12,455
|
)
|
||
Unpatented technology amortization
|
(3,395
|
)
|
(2,184
|
)
|
||
Patented technology amortization
|
(2,315
|
)
|
(2,213
|
)
|
||
Tradename amortization
|
(3,524
|
)
|
(3,042
|
)
|
||
Acquired backlog amortization
|
(17,760
|
)
|
(16,622
|
)
|
||
All other amortization
|
(8,045
|
)
|
(7,292
|
)
|
||
Accumulated amortization
|
(49,206
|
)
|
(43,808
|
)
|
||
Net definite-lived intangible assets
|
$
|
33,797
|
|
$
|
40,760
|
|
|
|
|
||||
Indefinite-lived intangible assets:
|
|
|
||||
Trademarks and trade names
|
$
|
1,305
|
|
$
|
1,305
|
|
Total indefinite-lived intangible assets
|
$
|
1,305
|
|
$
|
1,305
|
|
|
Nine months ended September 30,
|
|||||
(in thousands)
|
2018
|
2017
|
||||
Balance at beginning of period
|
$
|
42,065
|
|
$
|
48,622
|
|
Amortization expense
|
(5,398
|
)
|
(8,724
|
)
|
||
Currency translation adjustments and other
|
(1,565
|
)
|
3,877
|
|
||
Balance at end of the period
|
$
|
35,102
|
|
$
|
43,775
|
|
Year ending
|
Amortization expense
|
||
Three months ending December 31, 2018
|
$
|
1,311
|
|
Twelve months ending December 31, 2019
|
4,724
|
|
|
Twelve months ending December 31, 2020
|
3,976
|
|
|
Twelve months ending December 31, 2021
|
3,763
|
|
|
Twelve months ending December 31, 2022
|
3,671
|
|
|
Twelve months ending December 31, 2023
|
3,662
|
|
|
Thereafter
|
12,690
|
|
(in thousands)
|
September 30, 2018
|
December 31, 2017
|
||||
Land
|
$
|
3,597
|
|
$
|
3,631
|
|
Buildings
|
106,635
|
|
107,944
|
|
||
Machinery and equipment
|
182,653
|
|
205,331
|
|
||
Property under construction
|
2,278
|
|
5,979
|
|
||
|
295,163
|
|
322,885
|
|
||
Less accumulated depreciation
|
198,237
|
|
208,178
|
|
||
Net property, plant and equipment
|
$
|
96,926
|
|
$
|
114,707
|
|
|
Nine Months Ended September 30,
|
|||||
(in thousands)
|
2018
|
2017
|
||||
Balance at beginning of period
|
$
|
33,514
|
|
$
|
36,520
|
|
Additions
|
30,621
|
|
17,782
|
|
||
Expirations and other changes
|
(1,865
|
)
|
(9,053
|
)
|
||
Payments
|
(9,418
|
)
|
(10,534
|
)
|
||
Translation and other
|
(688
|
)
|
1,900
|
|
||
Balance at end of period
|
$
|
52,164
|
|
$
|
36,615
|
|
|
Pension Benefits
|
|
Other Benefits
|
||||||||||||||||||||||
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
||||||||||||||||||||
(in thousands)
|
2018
|
2017
|
2018
|
2017
|
|
2018
|
2017
|
2018
|
2017
|
||||||||||||||||
Interest cost
|
$
|
9,739
|
|
$
|
10,342
|
|
$
|
29,237
|
|
$
|
30,832
|
|
|
$
|
97
|
|
$
|
(106
|
)
|
$
|
289
|
|
$
|
255
|
|
Expected return on plan assets
|
(16,235
|
)
|
(14,936
|
)
|
(48,680
|
)
|
(44,646
|
)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||||
Amortization of prior service cost
|
25
|
|
29
|
|
75
|
|
80
|
|
|
(186
|
)
|
(561
|
)
|
(1,020
|
)
|
(2,277
|
)
|
||||||||
Recognized net actuarial loss (gain)
|
(4,196
|
)
|
—
|
|
(4,740
|
)
|
1,062
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||||
Benefit plans, net
|
(10,667
|
)
|
(4,565
|
)
|
(24,108
|
)
|
(12,672
|
)
|
|
(89
|
)
|
(667
|
)
|
(731
|
)
|
(2,022
|
)
|
||||||||
Service cost included in COS
|
186
|
|
200
|
|
562
|
|
681
|
|
|
4
|
|
3
|
|
12
|
|
11
|
|
||||||||
Net periodic benefit cost (benefit)
|
$
|
(10,481
|
)
|
$
|
(4,365
|
)
|
$
|
(23,546
|
)
|
$
|
(11,991
|
)
|
|
$
|
(85
|
)
|
$
|
(664
|
)
|
$
|
(719
|
)
|
$
|
(2,011
|
)
|
(in thousands)
|
September 30, 2018
|
December 31, 2017
|
||||
United States
|
$
|
190,600
|
|
$
|
94,300
|
|
Foreign
|
3,415
|
|
9,173
|
|
||
Total revolving debt
|
$
|
194,015
|
|
$
|
103,473
|
|
•
|
9.00
:1.0 for the quarter ending December 31, 2018,
|
•
|
4.00
:1.0 for the quarter ending March 31, 2019,
|
•
|
3.50
:1.0 for the quarter ending June 30, 2019,
|
•
|
3.00
:1.0 for the quarter ending September 30, 2019, and
|
•
|
3.00
:1.0 for or the quarters ending December 31, 2019 and each quarter thereafter.
|
•
|
1.00
:1.0 for the quarter ending September 30, 2018,
|
•
|
1.00
:1.0 for the quarter ending December 31, 2018,
|
•
|
2.25
:1.0 for the quarter ending March 31, 2019,
|
•
|
3.00
:1.0 for the quarter ending June 30, 2019,
|
•
|
3.25
:1.0 for the quarter ending September 30, 2019, and
|
•
|
3.25
:1.0 for or the quarters ending December 31, 2019 and each quarter thereafter.
|
(in thousands)
|
September 30, 2018
|
||
Proceeds
|
$
|
20,000
|
|
Discount and fees
|
4,111
|
|
|
Paid-in-kind interest
|
16
|
|
|
Principal
|
24,127
|
|
|
Unamortized discount and fees
|
(4,098
|
)
|
|
Debt balance
|
$
|
20,029
|
|
|
Asset and Liability Derivative
|
|||||
(in thousands)
|
September 30, 2018
|
December 31, 2017
|
||||
Derivatives designated as hedges:
|
|
|
||||
Foreign exchange contracts:
|
|
|
||||
Location of FX forward contracts designated as hedges:
|
|
|
||||
Accounts receivable-other
|
$
|
438
|
|
$
|
1,088
|
|
Other assets
|
463
|
|
312
|
|
||
Accounts payable
|
—
|
|
105
|
|
||
|
|
|
||||
Derivatives not designated as hedges:
|
|
|
||||
Foreign exchange contracts:
|
|
|
||||
Location of FX forward contracts not designated as hedges:
|
|
|
||||
Accounts receivable-other
|
$
|
5
|
|
$
|
7
|
|
Accounts payable
|
2
|
|
1,722
|
|
||
Other liabilities
|
—
|
|
12
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||
(in thousands)
|
2018
|
2017
|
|
2018
|
2017
|
||||||||
Derivatives designated as hedges:
|
|
|
|
|
|
||||||||
Cash flow hedges
|
|
|
|
|
|
||||||||
Foreign exchange contracts
|
|
|
|
|
|
||||||||
Amount of gain (loss) recognized in other comprehensive income
|
$
|
103
|
|
$
|
398
|
|
|
$
|
1,102
|
|
$
|
2,642
|
|
Effective portion of gain (loss) reclassified from AOCI into earnings by location:
|
|
|
|
|
|
||||||||
Revenues
|
508
|
|
2,092
|
|
|
1,646
|
|
8,094
|
|
||||
Cost of operations
|
(6
|
)
|
159
|
|
|
(5
|
)
|
113
|
|
||||
Other-net
|
—
|
|
(7,930
|
)
|
|
—
|
|
(7,438
|
)
|
||||
Portion of gain (loss) recognized in income that is excluded from effectiveness testing by location:
|
|
|
|
|
|
||||||||
Other-net
|
(498
|
)
|
(7,005
|
)
|
|
(633
|
)
|
(10,524
|
)
|
||||
|
|
|
|
|
|
||||||||
Derivatives not designated as hedges:
|
|
|
|
|
|
||||||||
Forward contracts
|
|
|
|
|
|
||||||||
Loss recognized in income by location:
|
|
|
|
|
|
||||||||
Other-net
|
$
|
(28
|
)
|
$
|
(1,364
|
)
|
|
$
|
(24
|
)
|
$
|
(1,709
|
)
|
(in thousands)
|
|
|
|
|
||||||||
Available-for-sale securities
|
September 30, 2018
|
Level 1
|
Level 2
|
Level 3
|
||||||||
Commercial paper
|
$
|
3,384
|
|
$
|
—
|
|
$
|
3,384
|
|
$
|
—
|
|
Certificates of deposit
|
1,151
|
|
—
|
|
1,151
|
|
—
|
|
||||
Mutual funds
|
1,330
|
|
—
|
|
1,330
|
|
—
|
|
||||
Corporate notes and bonds
|
1,597
|
|
1,597
|
|
—
|
|
—
|
|
||||
United States Government and agency securities
|
7,954
|
|
7,954
|
|
—
|
|
—
|
|
||||
Total fair value of available-for-sale securities
|
$
|
15,416
|
|
$
|
9,551
|
|
$
|
5,865
|
|
$
|
—
|
|
(in thousands)
|
|
|
|
|
||||||||
Available-for-sale securities
|
December 31, 2017
|
Level 1
|
Level 2
|
Level 3
|
||||||||
Commercial paper
|
$
|
1,895
|
|
$
|
—
|
|
$
|
1,895
|
|
$
|
—
|
|
Certificates of deposit
|
2,398
|
|
—
|
|
2,398
|
|
—
|
|
||||
Mutual funds
|
1,331
|
|
—
|
|
1,331
|
|
—
|
|
||||
Corporate notes and bonds
|
4,447
|
|
4,447
|
|
—
|
|
—
|
|
||||
United States Government and agency securities
|
5,738
|
|
5,738
|
|
—
|
|
—
|
|
||||
Total fair value of available-for-sale securities
|
$
|
15,809
|
|
$
|
10,185
|
|
$
|
5,624
|
|
$
|
—
|
|
Derivatives
|
September 30, 2018
|
December 31, 2017
|
||||||
Forward contracts to purchase/sell foreign currencies
|
$
|
905
|
|
$
|
(432
|
)
|
•
|
Cash and cash equivalents and restricted cash and cash equivalents
. The carrying amounts that we have reported in the accompanying condensed consolidated balance sheets for cash and cash equivalents and restricted cash and cash equivalents approximate their fair values due to their highly liquid nature.
|
•
|
Revolving debt and last out term loan
. We base the fair values of debt instruments on quoted market prices. Where quoted prices are not available, we base the fair values on the present value of future cash flows discounted at estimated borrowing rates for similar debt instruments or on estimated prices based on current yields for debt issues of similar quality and terms. The fair value of our debt instruments approximated their carrying value at
September 30, 2018
and
December 31, 2017
.
|
(in thousands)
|
2018
|
2017
|
||||
Accrued capital expenditures in accounts payable
|
$
|
23
|
|
$
|
1,118
|
|
Accreted interest expense on our second lien term loan facility
|
$
|
3,202
|
|
$
|
1,095
|
|
(in thousands)
|
2018
|
2017
|
||||
Income tax payments (refunds), net
|
$
|
3,440
|
|
$
|
(11,190
|
)
|
Interest payments on our U.S. revolving credit facility
|
$
|
9,200
|
|
$
|
2,876
|
|
Interest payments on our second lien term loan facility
|
$
|
7,627
|
|
$
|
2,492
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||
(in thousands)
|
2018
|
2017
|
|
2018
|
2017
|
||||||||
Components associated with borrowings from:
|
|
|
|
|
|
||||||||
U.S. Revolving Credit Facility
|
$
|
3,879
|
|
$
|
1,018
|
|
|
$
|
9,658
|
|
$
|
3,146
|
|
Second Lien Term Loan Facility
|
—
|
|
2,554
|
|
|
7,460
|
|
2,554
|
|
||||
Last Out Term Loan - interest paid
|
38
|
|
—
|
|
|
38
|
|
—
|
|
||||
Last Out Term Loan - interest paid-in-kind
|
83
|
|
—
|
|
|
83
|
|
—
|
|
||||
Foreign revolving credit facilities
|
157
|
|
234
|
|
|
436
|
|
708
|
|
||||
|
4,157
|
|
3,806
|
|
|
17,675
|
|
6,408
|
|
||||
Components associated with amortization or accretion of:
|
|
|
|
|
|
||||||||
U.S. Revolving Credit Facility deferred financing fees and commitment fees
|
6,104
|
|
2,304
|
|
|
14,419
|
|
3,892
|
|
||||
Second Lien Term Loan Facility discount and financing fees
|
—
|
|
1,095
|
|
|
3,202
|
|
1,095
|
|
||||
Last Out Term Loan discount and financing fees
|
49
|
|
—
|
|
|
49
|
|
—
|
|
||||
|
6,153
|
|
3,399
|
|
|
17,670
|
|
4,987
|
|
||||
|
|
|
|
|
|
||||||||
Other interest expense
|
109
|
|
50
|
|
|
403
|
|
3,846
|
|
||||
|
|
|
|
|
|
||||||||
Total interest expense
|
$
|
10,419
|
|
$
|
7,255
|
|
|
$
|
35,748
|
|
$
|
15,241
|
|
(in thousands)
|
September 30, 2018
|
December 31, 2017
|
September 30, 2017
|
December 31, 2016
|
||||||||
Held by foreign entities
|
$
|
25,838
|
|
$
|
42,490
|
|
$
|
35,123
|
|
$
|
89,042
|
|
Held by United States entities
(1)
|
6,645
|
|
1,227
|
|
2,290
|
|
(1,616
|
)
|
||||
Cash and cash equivalents of continuing operations
|
32,483
|
|
43,717
|
|
37,413
|
|
87,426
|
|
||||
|
|
|
|
|
||||||||
Reinsurance reserve requirements
|
13,390
|
|
21,061
|
|
21,456
|
|
21,189
|
|
||||
Restricted foreign accounts
|
6,299
|
|
4,919
|
|
5,192
|
|
6,581
|
|
||||
Restricted cash and cash equivalents
|
19,689
|
|
25,980
|
|
26,648
|
|
27,770
|
|
||||
|
|
|
|
|
||||||||
Total cash, cash equivalents and restricted cash of continuing operations shown in the consolidated statements of cash flows
|
$
|
52,172
|
|
$
|
69,697
|
|
$
|
64,061
|
|
$
|
115,196
|
|
|
|
|
|
|
||||||||
Total cash and cash equivalents of discontinued operations
(2)
|
$
|
17,646
|
|
$
|
12,950
|
|
$
|
10,724
|
|
$
|
8,461
|
|
•
|
$39.7 million
pre-tax gain in September 2018 for the sale of PBRRC, a subsidiary that held
two
operations and maintenance contracts for waste-to-energy facilities in West Palm Beach, Florida. Prior to the divestiture, PBRRC generated annual revenues of approximately $60 million in the Renewable segment. We received cash proceeds of
|
•
|
$49.2 million
debt extinguishment loss from early repayment of the Second Lien Term Loan Facility on May 4, 2018 with
$214.9 million
of the proceeds from a Rights Offering that was completed on April 30, 2018. Through the Rights Offering, we raised
$248.4 million
of gross proceeds and issued
124.3 million
shares of common stock. The extinguishment loss and the Rights Offering are more fully described in
Note 19
and
Note 20
to the condensed consolidated financial statements.
|
•
|
$99.6 million
of non-cash income tax charges in the three months ended September 30, 2018 to increase the valuation allowance against our remaining net deferred tax assets as described in
Note 8
to the condensed consolidated financial statements.
|
•
|
$37.5 million
to fully impair goodwill related to our SPIG reporting unit in the second quarter of 2018 due to lower bookings than previously forecasted, which resulted in a reduction in the forecast for the reporting unit. See further discussion in
Note 12
to the condensed consolidated financial statements. $86.9 million of goodwill impairment charges were recorded in the third quarter of 2017, of which $50.0 million fully impaired the goodwill of the Renewable segment reporting unit and $36.9 million related to the SPIG reporting unit in the Industrial segment.
|
•
|
$7.2 million
and
$15.5 million
of financial advisory services are included in SG&A in the
three and nine
months ended
September 30, 2018
, respectively. $0.4 million of financial advisory services are included in the three and nine months ended September 30, 2107. These services are requirements of our U.S. Revolving Credit Facility, as described more fully in
Note 17
to the condensed consolidated financial statements.
|
•
|
$2.9 million
and
$3.7 million
of restructuring and spin-off costs were recognized in the third quarters of 2018 and 2017, respectively, and
$13.6 million
and
$8.6 million
were recognized in the nine months ended September 30, 2018 and 2017, respectively.
|
•
|
$6.5 million
of gain on the sale of our interest in Babcock & Wilcox Beijing Company, Ltd. ("BWBC"), an equity method investment in China, was recognized in the first quarter of 2018 and is included in Equity in income and impairment of investees. The sale was completed in early 2018 with proceeds, net of withholding tax, of
$19.8 million
.
|
•
|
$18.4 million
and
$18.2 million
of other-than-temporary impairment of our interest in Thermax Babcock & Wilcox Energy Solutions Private Limited ("TBWES"), an equity method investment in India, in the first quarter of 2018 and the second quarter of 2017, respectively, based on an agreement to sell, preceded by a change in strategy. We completed the sale in July 2018, which generated
$15.0 million
for the sale and settlement of contractual claims. The impairments are included in Equity in income and impairment of investees. See further discussion in
Note 11
to the condensed consolidated financial statements.
|
•
|
$15.5 million
(DKK
100.0 million
) allowance for an insurance claim receivable to recover a portion of the losses on the first European renewable loss project was recorded in the second quarter of 2018 as a result of receiving a dispute from the insurer.
We believe that the dispute from the insurer is without merit and continue to believe we are entitled to the full value of the claim. We intend to aggressively pursue full recovery under the policy, and we filed for arbitration in July 2018. However, an allowance for the entire receivable was recorded in the second quarter of 2018 based upon the dispute by the insurer, which is considered contradictory evidence in the accounting probability assessment of this loss recovery, even if it is believed to be without merit.
|
•
|
$1.2 million
of accelerated depreciation expense in the third quarter of 2018 for fixed assets affected by our September 2018 announcement to consolidate office space and relocate our global headquarters to Akron, Ohio in mid-2019. We expect a total of
$7.0 million
of accelerated depreciation to be recognized through mid-2019.
|
•
|
$1.5 million
to dispose and write off unused IT equipment and cancel in-process IT projects in the second quarter of 2018.
|
•
|
$4.2 million
and
$4.7 million
of actuarially determined mark-to-market ("MTM") gains in the three and nine months ended September 30, 2018, respectively, compared to a loss of
$1.1 million
in the nine months ended September 30, 2017. Interim MTM gains and loss were triggered by lump-sum settlements in our Canadian pension plan and by a curtailment in our domestic pension plan from the sale of PBRRC. MTM gains and losses are further described in
Note 16
to the condensed consolidated financial statements.
|
•
|
$0.1 million
and
$1.6 million
of acquisition and integration costs in the
three and nine
months ended
September 30, 2017
, respectively, related to the acquisitions of SPIG and Universal.
|
•
|
raised gross proceeds of
$248.4 million
on April 30, 2018 through the rights offering as described in
Note 20
(the "Rights Offering") to the condensed consolidated financial statements;
|
•
|
repaid on May 4, 2018 the Second Lien Term Loan Facility described in
Note 19
to the condensed consolidated financial statements that had been in default beginning March 1, 2018;
|
•
|
completed the sale of our MEGTEC and Universal businesses on October 5, 2018, for
$130 million
, subject to adjustment, resulting in receipt of $115.0 million in cash, net of $19.5 million in cash sold with the businesses, and $7.7 million that was deposited in escrow pending final settlement of working capital and other customary matters;
|
•
|
completed the sale of Palm Beach Resource Recovery Corporation ("PBRRC"), a subsidiary that held
two
operations and maintenance contracts for waste-to-energy facilities in West Palm Beach, Florida, on September 17, 2018 for $45 million subject to adjustment, resulting in receipt of
$38.8 million
in cash and $4.9 million, which was deposited in escrow pending final settlement of working capital and other customary matters;
|
•
|
sold our equity method investments in Babcock & Wilcox Beijing Company, Ltd. ("BWBC"), a joint venture in China, and Thermax Babcock & Wilcox Energy Solutions Private Limited ("TBWES"), a joint venture in India, and settled related contractual claims, resulting in proceeds of
$21.1 million
in the second quarter of 2018 and
$15.0 million
in the third quarter of 2018, respectively;
|
•
|
sold another non-core business for
$5.1 million
in the first quarter of 2018;
|
•
|
initiated restructuring actions and other additional cost reductions in the second quarter of 2018 that are designed to save approximately
$38 million
annually;
|
•
|
received
$20 million
in net proceeds from the Last Out Term Loan, described in Note 18 to the condensed consolidated financial statements, from B. Riley FBR, Inc., a related party, during the third quarter of 2018 and another
$10 million
in net proceeds from the Last Out Term Loan from the same lender in October 2018; and
|
•
|
entered into several waivers and amendments to avoid default under our U.S. Revolving Credit Facility as described in Note 17 to the condensed consolidated financial statements, the most recent of which is dated October 31, 2018. As part of this latest amendment, our lenders agreed to: (1) extend the deadline to obtain written concessions from customers in an amount of at least $25.0 million to February 15, 2019; (2) change the interest coverage and senior leverage financial covenant ratios; (3) amend the definition of EBITDA to allow certain add-back adjustments inclusive of the third quarter of 2018; (4) extend certain Renewable loss contract milestones; and (5) adjust certain minimum liquidity requirements.
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||||||
(In thousands)
|
2018
|
2017
|
$ Change
|
|
2018
|
2017
|
$ Change
|
||||||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||||||
Power segment
|
$
|
191,050
|
|
$
|
202,222
|
|
$
|
(11,172
|
)
|
|
$
|
547,928
|
|
$
|
612,274
|
|
$
|
(64,346
|
)
|
Renewable segment
|
76,484
|
|
108,557
|
|
(32,073
|
)
|
|
191,444
|
|
262,167
|
|
(70,723
|
)
|
||||||
Industrial segment
|
34,849
|
|
47,454
|
|
(12,605
|
)
|
|
117,608
|
|
143,271
|
|
(25,663
|
)
|
||||||
Eliminations
|
(7,420
|
)
|
(1,363
|
)
|
(6,057
|
)
|
|
(17,504
|
)
|
(6,539
|
)
|
(10,965
|
)
|
||||||
|
294,963
|
|
356,870
|
|
(61,907
|
)
|
|
839,476
|
|
1,011,173
|
|
(171,697
|
)
|
||||||
Gross profit (loss)
(1)
:
|
|
|
|
|
|
|
|
||||||||||||
Power segment
|
34,313
|
|
35,390
|
|
(1,077
|
)
|
|
95,189
|
|
116,952
|
|
(21,763
|
)
|
||||||
Renewable segment
|
(17,120
|
)
|
181
|
|
(17,301
|
)
|
|
(136,898
|
)
|
(100,119
|
)
|
(36,779
|
)
|
||||||
Industrial segment
|
(5,524
|
)
|
(2,556
|
)
|
(2,968
|
)
|
|
(8,196
|
)
|
2,330
|
|
(10,526
|
)
|
||||||
Intangible amortization expense included in cost of operations
|
(1,207
|
)
|
(2,262
|
)
|
1,055
|
|
|
(4,868
|
)
|
(8,389
|
)
|
3,521
|
|
||||||
|
10,462
|
|
30,753
|
|
(20,291
|
)
|
|
(54,773
|
)
|
10,774
|
|
(65,547
|
)
|
||||||
Selling, general and administrative ("SG&A") expenses
|
(44,887
|
)
|
(49,871
|
)
|
4,984
|
|
|
(151,007
|
)
|
(163,723
|
)
|
12,716
|
|
||||||
Financial advisory services included in SG&A
|
(7,244
|
)
|
(358
|
)
|
(6,886
|
)
|
|
(15,475
|
)
|
(358
|
)
|
(15,117
|
)
|
||||||
Intangible amortization expense included in SG&A
|
(135
|
)
|
(127
|
)
|
(8
|
)
|
|
(530
|
)
|
(331
|
)
|
(199
|
)
|
||||||
Goodwill impairment
|
—
|
|
(86,903
|
)
|
86,903
|
|
|
(37,540
|
)
|
(86,903
|
)
|
49,363
|
|
||||||
Restructuring activities and spin-off transaction costs
|
(2,863
|
)
|
(3,664
|
)
|
801
|
|
|
(13,551
|
)
|
(8,648
|
)
|
(4,903
|
)
|
||||||
Research and development costs
|
(452
|
)
|
(1,893
|
)
|
1,441
|
|
|
(2,881
|
)
|
(6,123
|
)
|
3,242
|
|
||||||
Loss on asset disposals, net
|
(28
|
)
|
(59
|
)
|
31
|
|
|
(1,412
|
)
|
(61
|
)
|
(1,351
|
)
|
||||||
Equity in income and impairment of investees
|
—
|
|
1,234
|
|
(1,234
|
)
|
|
(11,757
|
)
|
(13,380
|
)
|
1,623
|
|
||||||
Operating loss
|
$
|
(45,147
|
)
|
$
|
(110,888
|
)
|
$
|
65,741
|
|
|
$
|
(288,926
|
)
|
$
|
(268,753
|
)
|
$
|
(20,173
|
)
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||||||
(in thousands)
|
2018
|
2017
|
$ Change
|
|
2018
|
2017
|
$ Change
|
||||||||||||
Adjusted EBITDA
|
|
|
|
|
|
|
|
||||||||||||
Power segment
(1)
|
$
|
21,911
|
|
$
|
21,624
|
|
$
|
287
|
|
|
$
|
49,524
|
|
$
|
66,434
|
|
$
|
(16,910
|
)
|
Renewable segment
|
(25,831
|
)
|
(10,648
|
)
|
(15,183
|
)
|
|
(166,188
|
)
|
(133,023
|
)
|
(33,165
|
)
|
||||||
Industrial segment
|
(11,212
|
)
|
(7,609
|
)
|
(3,603
|
)
|
|
(24,744
|
)
|
(12,994
|
)
|
(11,750
|
)
|
||||||
Corporate
(2)
|
(5,793
|
)
|
(8,775
|
)
|
2,982
|
|
|
(23,601
|
)
|
(28,168
|
)
|
4,567
|
|
||||||
Research and development costs
|
(452
|
)
|
(1,893
|
)
|
1,441
|
|
|
(2,881
|
)
|
(6,123
|
)
|
3,242
|
|
||||||
Foreign exchange
|
(4,939
|
)
|
(6,902
|
)
|
1,963
|
|
|
(22,680
|
)
|
(4,563
|
)
|
(18,117
|
)
|
||||||
Other – net
|
(45
|
)
|
(241
|
)
|
196
|
|
|
221
|
|
(163
|
)
|
384
|
|
||||||
|
|
|
|
|
|
|
|
||||||||||||
Gain on sale of business
|
39,731
|
|
—
|
|
39,731
|
|
|
39,731
|
|
—
|
|
39,731
|
|
||||||
Gain on sale of equity method investment (BWBC)
|
—
|
|
—
|
|
—
|
|
|
6,509
|
|
—
|
|
6,509
|
|
||||||
Impairment of equity method investment in TBWES
|
—
|
|
—
|
|
—
|
|
|
(18,362
|
)
|
(18,193
|
)
|
(169
|
)
|
||||||
Loss on debt extinguishment
|
—
|
|
—
|
|
—
|
|
|
(49,241
|
)
|
—
|
|
(49,241
|
)
|
||||||
Loss on asset disposal
|
—
|
|
(61
|
)
|
61
|
|
|
(1,513
|
)
|
(61
|
)
|
(1,452
|
)
|
||||||
MTM gain (loss) from benefit plans
|
4,196
|
|
—
|
|
4,196
|
|
|
4,740
|
|
(1,062
|
)
|
5,802
|
|
||||||
Financial advisory services
|
(7,244
|
)
|
(358
|
)
|
(6,886
|
)
|
|
(15,475
|
)
|
(358
|
)
|
(15,117
|
)
|
||||||
Acquisition and integration costs included in SG&A
|
—
|
|
(141
|
)
|
141
|
|
|
—
|
|
(1,573
|
)
|
1,573
|
|
||||||
Goodwill impairment
|
—
|
|
(86,903
|
)
|
86,903
|
|
|
(37,540
|
)
|
(86,903
|
)
|
49,363
|
|
||||||
Restructuring activities and spin-off transaction costs
|
(2,863
|
)
|
(3,664
|
)
|
801
|
|
|
(13,551
|
)
|
(8,648
|
)
|
(4,903
|
)
|
||||||
Depreciation & amortization
|
(7,103
|
)
|
(7,228
|
)
|
125
|
|
|
(21,005
|
)
|
(23,387
|
)
|
2,382
|
|
||||||
Interest expense, net
|
(10,247
|
)
|
(7,131
|
)
|
(3,116
|
)
|
|
(35,316
|
)
|
(14,880
|
)
|
(20,436
|
)
|
||||||
Loss before income tax expense
|
(9,891
|
)
|
(119,930
|
)
|
110,039
|
|
|
(331,372
|
)
|
(273,665
|
)
|
(57,707
|
)
|
||||||
Income tax expense (benefit)
|
94,256
|
|
(5,309
|
)
|
99,565
|
|
|
99,285
|
|
(4,963
|
)
|
104,248
|
|
||||||
Loss from continuing operations
|
(104,147
|
)
|
(114,621
|
)
|
10,474
|
|
|
(430,657
|
)
|
(268,702
|
)
|
(161,955
|
)
|
||||||
Income (loss) from discontinued operations, net of tax
|
(1,447
|
)
|
532
|
|
(1,979
|
)
|
|
(60,875
|
)
|
(3,078
|
)
|
(57,797
|
)
|
||||||
Net loss
|
(105,594
|
)
|
(114,089
|
)
|
8,495
|
|
|
(491,532
|
)
|
(271,780
|
)
|
(219,752
|
)
|
||||||
Net income attributable to noncontrolling interest
|
(94
|
)
|
(213
|
)
|
119
|
|
|
(357
|
)
|
(566
|
)
|
209
|
|
||||||
Net loss attributable to stockholders
|
$
|
(105,688
|
)
|
$
|
(114,302
|
)
|
$
|
8,614
|
|
|
$
|
(491,889
|
)
|
$
|
(272,346
|
)
|
$
|
(219,543
|
)
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||||||
(In thousands)
|
2018
|
2017
|
$ Change
|
|
2018
|
2017
|
$ Change
|
||||||||||||
Revenues
|
$
|
191,050
|
|
$
|
202,222
|
|
$
|
(11,172
|
)
|
|
$
|
547,928
|
|
$
|
612,274
|
|
$
|
(64,346
|
)
|
Gross profit (loss)
|
$
|
34,313
|
|
$
|
35,390
|
|
$
|
(1,077
|
)
|
|
$
|
95,189
|
|
$
|
116,952
|
|
$
|
(21,763
|
)
|
Adjusted EBITDA
|
$
|
21,911
|
|
$
|
21,624
|
|
$
|
287
|
|
|
$
|
49,524
|
|
$
|
66,434
|
|
$
|
(16,910
|
)
|
Gross profit %
|
18.0
|
%
|
17.5
|
%
|
|
|
17.4
|
%
|
19.1
|
%
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||||||
(in thousands)
|
2018
|
2017
|
$ Change
|
|
2018
|
2017
|
$ Change
|
||||||||||||
Revenues
|
$
|
76,484
|
|
$
|
108,557
|
|
$
|
(32,073
|
)
|
|
$
|
191,444
|
|
$
|
262,167
|
|
$
|
(70,723
|
)
|
Gross profit (loss)
|
$
|
(17,120
|
)
|
$
|
181
|
|
$
|
(17,301
|
)
|
|
$
|
(136,898
|
)
|
$
|
(100,119
|
)
|
$
|
(36,779
|
)
|
Adjusted EBITDA
|
$
|
(25,831
|
)
|
$
|
(10,648
|
)
|
$
|
(15,183
|
)
|
|
$
|
(166,188
|
)
|
$
|
(133,023
|
)
|
$
|
(33,165
|
)
|
Gross profit %
|
(22.4
|
)%
|
0.2
|
%
|
|
|
(71.5
|
)%
|
(38.2
|
)%
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||||||
(In thousands)
|
2018
|
2017
|
$ Change
|
|
2018
|
2017
|
$ Change
|
||||||||||||
Revenues
|
$
|
34,849
|
|
$
|
47,454
|
|
$
|
(12,605
|
)
|
|
$
|
117,608
|
|
$
|
143,271
|
|
$
|
(25,663
|
)
|
Gross profit (loss)
|
$
|
(5,524
|
)
|
$
|
(2,556
|
)
|
$
|
(2,968
|
)
|
|
$
|
(8,196
|
)
|
$
|
2,330
|
|
$
|
(10,526
|
)
|
Adjusted EBITDA
|
$
|
(11,212
|
)
|
$
|
(7,609
|
)
|
$
|
(3,603
|
)
|
|
$
|
(24,744
|
)
|
$
|
(12,994
|
)
|
$
|
(11,750
|
)
|
Gross profit %
|
(15.9
|
)%
|
(5.4
|
)%
|
|
|
(7.0
|
)%
|
1.6
|
%
|
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||
(In millions)
|
2018
|
2017
|
|
2018
|
2017
|
||||||||
Power
|
$
|
131
|
|
$
|
122
|
|
|
$
|
535
|
|
$
|
476
|
|
Renewable
(1)
|
(440
|
)
|
35
|
|
|
(417
|
)
|
86
|
|
||||
Industrial
|
5
|
|
28
|
|
|
51
|
|
172
|
|
||||
Other/eliminations
|
—
|
|
(2
|
)
|
|
(2
|
)
|
(40
|
)
|
||||
Bookings
|
$
|
(304
|
)
|
$
|
183
|
|
|
$
|
167
|
|
$
|
694
|
|
(In approximate millions)
|
September 30, 2018
|
December 31, 2017
|
September 30, 2017
|
||||||
Power
|
$
|
440
|
|
$
|
453
|
|
$
|
482
|
|
Renewable
(1)(2)
|
400
|
|
1,008
|
|
1,064
|
|
|||
Industrial
|
109
|
|
175
|
|
202
|
|
|||
Other/eliminations
|
(28
|
)
|
(43
|
)
|
(37
|
)
|
|||
Backlog
|
$
|
921
|
|
$
|
1,593
|
|
$
|
1,711
|
|
(In approximate millions)
|
2018
|
2019
|
Thereafter
|
Total
|
||||||||
Power
|
$
|
164
|
|
$
|
183
|
|
$
|
93
|
|
$
|
440
|
|
Renewable
|
57
|
|
87
|
|
256
|
|
400
|
|
||||
Industrial
|
45
|
|
54
|
|
10
|
|
109
|
|
||||
Other/eliminations
|
(10
|
)
|
$
|
(18
|
)
|
$
|
—
|
|
(28
|
)
|
||
Expected revenue from backlog
|
$
|
256
|
|
$
|
306
|
|
$
|
359
|
|
$
|
921
|
|
(in thousands)
|
Power
|
|
Renewable
|
|
Industrial
(1)
|
|
Total
|
||||||||
Balance at December 31, 2017
(2)
|
$
|
47,370
|
|
|
$
|
—
|
|
|
$
|
38,308
|
|
|
$
|
85,678
|
|
Currency translation adjustments
|
(157
|
)
|
|
—
|
|
|
(768
|
)
|
|
(925
|
)
|
||||
Second quarter 2018 impairment charges
|
—
|
|
|
—
|
|
|
(37,540
|
)
|
|
(37,540
|
)
|
||||
Balance at September 30, 2018
(2)
|
$
|
47,213
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
47,213
|
|
(in thousands)
|
Power
|
|
Renewable
|
|
Industrial
(1)
|
|
Total
|
||||||||
Balance at December 31, 2016
|
$
|
46,220
|
|
|
$
|
48,435
|
|
|
$
|
68,432
|
|
|
$
|
163,087
|
|
Currency translation adjustments
|
1,180
|
|
|
1,530
|
|
|
6,491
|
|
|
9,201
|
|
||||
2017 impairment charges
|
—
|
|
|
(49,965
|
)
|
|
(36,938
|
)
|
|
(86,903
|
)
|
||||
Balance at September 30, 2017
(2)
|
$
|
47,400
|
|
|
$
|
—
|
|
|
$
|
37,985
|
|
|
$
|
85,385
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||||||
(In thousands, except for percentages)
|
2018
|
2017
|
$ Change
|
|
2018
|
2017
|
$ Change
|
||||||||||||
Loss before income taxes
|
$
|
(9,891
|
)
|
$
|
(119,930
|
)
|
$
|
110,039
|
|
|
$
|
(331,372
|
)
|
$
|
(273,665
|
)
|
$
|
(57,707
|
)
|
Income tax expense (benefit)
|
$
|
94,256
|
|
$
|
(5,309
|
)
|
$
|
99,565
|
|
|
$
|
99,285
|
|
$
|
(4,963
|
)
|
$
|
104,248
|
|
Effective tax rate
|
(952.9
|
)%
|
4.4
|
%
|
|
|
(30.0
|
)%
|
1.8
|
%
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||
(in thousands)
|
2018
|
2017
|
|
2018
|
2017
|
||||||||
United States
|
$
|
28,607
|
|
$
|
(11,124
|
)
|
|
$
|
(80,141
|
)
|
$
|
(44,610
|
)
|
Other than the United States
|
(38,498
|
)
|
(108,806
|
)
|
|
(251,231
|
)
|
(229,055
|
)
|
||||
Income (loss) before provision for (benefit from) income taxes
|
$
|
(9,891
|
)
|
$
|
(119,930
|
)
|
|
$
|
(331,372
|
)
|
$
|
(273,665
|
)
|
•
|
raised gross proceeds of
$248.4 million
on April 30, 2018 through Rights Offering as described in
Note 20
to the condensed consolidated financial statements;
|
•
|
repaid on May 4, 2018 the Second Lien Term Loan Facility described in
Note 19
to the condensed consolidated financial statements that had been in default beginning March 1, 2018;
|
•
|
completed the sale of our MEGTEC and Universal businesses on October 5, 2018, for
$130 million
, subject to adjustment, resulting in receipt of $115.0 million in cash, net of $19.5 million in cash sold with the businesses, and $7.7 million that was deposited in escrow pending final settlement of working capital and other customary matters;
|
•
|
completed the sale of PBRRC, a subsidiary that held
two
operations and maintenance contracts for waste-to-energy facilities in West Palm Beach, Florida, on September 17, 2018 for $45 million, subject to adjustment, resulting in receipt of
$38.8 million
in cash and $4.9 million, which was deposited in escrow pending final settlement of working capital and other customary matters;
|
•
|
sold our equity method investments in BWBC, a joint venture in China, and TBWES, a joint venture in India, and settled related contractual claims, resulting in proceeds of
$21.1 million
in the second quarter of 2018 and
$15.0 million
in the third quarter of 2018, respectively;
|
•
|
sold another non-core business for
$5.1 million
in the first quarter of 2018;
|
•
|
initiated restructuring actions and other additional cost reductions in the second quarter of 2018 that are designed to save approximately
$38 million
annually;
|
•
|
received
$20 million
in net proceeds from the Last Out Term Loan, described in
Note 18
to the condensed consolidated financial statements, from B. Riley FBR, Inc., a related party, during the third quarter of 2018 and another
$10 million
in net proceeds from the Last Out Term Loan from the same lender in October 2018; and
|
•
|
entered into several waivers and amendments to avoid default under our U.S. Revolving Credit Facility as described in Note 17 to the condensed consolidated financial statements, the most recent of which is dated October 31, 2018. As part of this latest amendment, our lenders agreed to: (1) extend the deadline to obtain written concessions from customers in an amount of at least $25.0 million to February 15, 2019; (2) change the interest coverage and senior leverage financial covenant ratios; (3) amend the definition of EBITDA to allow certain add-back adjustments inclusive of the third quarter of 2018; (4) extend certain Renewable loss contract milestones; and (5) adjust certain minimum liquidity requirements.
|
•
|
9.75
:1.0 for the quarters ending September 30, 2018,
|
•
|
9.00
:1.0 for the quarter ending December 31, 2018,
|
•
|
4.00
:1.0 for the quarter ending March 31, 2019,
|
•
|
3.50
:1.0 for the quarter ending June 30, 2019,
|
•
|
3.00
:1.0 for the quarter ending September 30, 2019, and
|
•
|
3.00
:1.0 for or the quarters ending December 31, 2019 and each quarter thereafter.
|
•
|
1.00
:1.0 for the quarter ending September 30, 2018,
|
•
|
1.00
:1.0 for the quarter ending December 31, 2018,
|
•
|
2.25
:1.0 for the quarter ending March 31, 2019,
|
•
|
3.00
:1.0 for the quarter ending June 30, 2019,
|
•
|
3.25
:1.0 for the quarter ending September 30, 2019, and
|
•
|
3.25
:1.0 for or the quarters ending December 31, 2019 and each quarter thereafter.
|
•
|
difficulties encountered on our large-scale contracts related to the procurement of materials or due to schedule disruptions, equipment performance failures, engineering and design complexity, unforeseen site conditions, rejection clauses in customer contracts or other factors that may result in additional costs to us, reductions in revenue, claims or disputes;
|
•
|
our inability to obtain compensation for additional work we perform or expenses we incur as a result of our customers or subcontractors providing deficient design or engineering information or equipment or materials;
|
•
|
requirements to pay liquidated damages upon our failure to meet schedule or performance requirements of our contracts; and
|
•
|
difficulties in engaging third-party subcontractors, equipment manufacturers or materials suppliers or failures by third-party subcontractors, equipment manufacturers or materials suppliers to perform could result in contract delays and cause us to incur additional costs.
|
•
|
flexibility in planning for, or reacting to, changes in our business or economic, regulatory and industry conditions;
|
•
|
ability to invest in joint ventures or acquire other companies;
|
•
|
ability to sell assets;
|
•
|
ability to pay dividends to our stockholders;
|
•
|
ability to repurchase shares of our common stock;
|
•
|
ability to borrow additional funds; and
|
•
|
ability to issue additional letters of credit.
|
Period
|
|
Total number of shares purchased
(1)
|
Average
price paid
per share
|
Total number of
shares purchased as
part of publicly
announced plans or
programs
|
Approximate dollar value of shares that may
yet be purchased under
the plans or programs
(in thousands)
(2)
|
||||||
July 1, 2018 - July 31, 2018
|
|
6,396
|
|
$—
|
—
|
|
$100,000
|
||||
August 1, 2018 - August 31, 2018
|
|
1,190
|
|
$—
|
—
|
|
$100,000
|
||||
September 1, 2018 - September 30, 2018
|
|
1,464
|
|
$—
|
—
|
|
$100,000
|
||||
Total
|
|
9,050
|
|
|
—
|
|
|
(1)
|
Includes 6,396, 1,190 and 1,464 shares repurchased in July, August and September, respectively, pursuant to the provisions of employee benefit plans that require us to repurchase shares to satisfy employee statutory income tax withholding obligations.
|
(2)
|
On August 4, 2016, we announced that our board of directors authorized the repurchase of an indeterminate number of our shares of common stock in the open market at an aggregate market value of up to $100 million over the next twenty-four months. As of November 2, 2018, we have not made any share repurchases under the August 4, 2016 share repurchase authorization.
|
November 8, 2018
|
|
|
BABCOCK & WILCOX ENTERPRISES, INC.
|
|
|
|
|
|
|
By:
|
/s/ Daniel W. Hoehn
|
|
|
|
Daniel W. Hoehn
|
|
|
|
Vice President, Controller & Chief Accounting Officer
|
|
|
|
(Principal Accounting Officer and Duly Authorized Representative)
|
1.
|
Amendments to the Credit Agreement.
|
2.
|
Joinder
|
3.
|
Consent
|
4.
|
Term Loan Facility Closing Fee.
|
5.
|
Effectiveness; Conditions Precedent.
|
(a)
|
the Administrative Agent shall have received each of the following documents or instruments in form and substance acceptable to the Administrative Agent:
|
(i)
|
counterparts of this Amendment executed by the Loan Parties, the Administrative Agent, the Term Loan Lenders and the Required Lenders;
|
(ii)
|
a certificate of the chief financial officer or treasurer of the Borrower certifying that as of the Amendment No. 9 Effective Date (A) all of the representations and warranties in this Amendment are true and correct in all material respects (or, to the extent any such representation and warranty is modified by a materiality or Material Adverse Effect standard, in all respects) as of such date (except to the extent that such representations and warranties expressly relate to an earlier date, in which case they shall be true and correct in all material respects (or, to the extent any such representation and warranty is modified by a materiality or Material Adverse Effect standard, in all respects) as of such earlier date), (B) no Default shall exist, or would result from the occurrence of the Amendment No. 9 Effective Date and (C) that since December 31, 2017, there have not occurred any facts, circumstances, changes, developments or events which, individually or in the aggregate, have constituted or would reasonably be expected to result in, a Material Adverse Effect;
|
(iii)
|
satisfactory opinions of each of Loan Parties’ counsels regarding due execution, enforceability and non-contravention of law, in form and substance satisfactory to the Administrative Agent (and consistent in scope with the prior opinion delivered by the Loan Parties’ counsel to the Administrative Agent in connection with Amendment No. 8) and any other opinion from local counsel reasonably requested by the Administrative Agent;
|
(iv)
|
a solvency certificate, executed by a Responsible Officer of the Borrower in form and substance reasonably acceptable to the Administrative Agent, which, among other things, shall certify that the Borrower will be Solvent as of the date hereof and after giving effect to each of the consummation of the Orion Sale (as defined in Amendment No. 7), Project Burn (as defined in Amendment No. 8) and the Barberton Sale, individually and in the aggregate, on a pro forma basis; and
|
(v)
|
such documentation and other information as has been reasonably requested by the Administrative Agent with respect to the Barberton Sale.
|
(b)
|
without prejudice to, or limiting the Borrower’s obligations under, Section 10.04 (
Expenses; Indemnity; Damage Waiver
) of the Credit Agreement, all outstanding fees, costs and expenses due to the Administrative Agent and the Lenders, including on account of Agent’s Legal Advisor and FTI, shall have been paid in full to the extent that the Borrower has received an invoice therefor (with reasonable and customary supporting documentation) at least two Business Days prior to the Amendment No. 9 Effective Date (without prejudice to any post-closing settlement of such fees, costs and expenses to the extent not so invoiced);
|
(c)
|
each of the representations and warranties made by the Borrower in
Section 6
hereof shall be true and correct.
|
6.
|
Representations and Warranties.
|
(a)
|
that both immediately prior to and immediately after giving effect to this Amendment,
no Default exists; |
(b)
|
the representations and warranties contained in the Credit Agreement (as amended
hereby) are true and correct in all material respects on and as of the date hereof (except to the extent that such representations and warranties (i) specifically refer to an earlier date, in which case they shall be true and correct in all material respects as of such earlier date and (ii) contain a materiality or Material Adverse Effect qualifier, in which case such representations and warranties shall be true and correct in all respects); |
(c)
|
the execution, delivery and performance by the Borrower and the other Loan Parties
of this Amendment and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate, limited liability company or partnership action, including the consent of shareholders, partners and members where required, do not contravene any Loan Party or any of its Subsidiaries’ respective Constituent Documents, do not violate any Requirement of Law applicable to any Loan Party or any order or decree of any Governmental Authority or arbiter applicable to any Loan Party and do not require the consent of, authorization by, approval of, notice to, or filing or registration with, any Governmental Authority or any other Person in order to be effective and enforceable; |
(d)
|
this Amendment has been duly executed and delivered on behalf of the Borrower and
the other Loan Parties; |
(e)
|
this Amendment constitutes a legal, valid and binding obligation of the Borrower and
the other Loan Parties enforceable against the Borrower and the other Loan Parties in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, Debtor Relief Laws or similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity; and |
(f)
|
as of the date hereof, all Liens, security interests, assignments and pledges encumbering the Collateral, created pursuant to and/or referred to in the Credit Agreement or the other Loan Documents, are valid, enforceable, duly perfected to the extent required by the Loan Documents, non-avoidable, first priority liens, security interests, assignments and pledges (subject to Liens permitted by
Section 7.02
of the Credit Agreement), continue unimpaired, are in full force and effect and secure and shall continue to secure all of the obligations purported to be secured in the respective Security Instruments pursuant to which such Liens were granted.
|
7.
|
Consent, Acknowledgement and Reaffirmation of Indebtedness and Liens.
|
(a)
|
expressly consents to the amendments and modifications to the Credit Agreement effected hereby;
|
(b)
|
expressly confirms and agrees that, notwithstanding the effectiveness of this Amendment, each Loan Document to which it is a party is, and all of the obligations and liabilities of such Loan Party to the Administrative Agent, the Lenders and each other Secured Party contained in the Loan Documents to which it is a party (in each case, as amended and modified by this Amendment), are and shall continue to be, in full force and effect and are hereby reaffirmed, ratified and confirmed in all respects and, without limiting the foregoing, agrees to be bound by and abide by and operate and perform under and pursuant to and comply fully with all of the terms, conditions, provisions, agreements, representations, undertakings, warranties, indemnities, guaranties, grants of security interests and covenants contained in the Loan Documents;
|
(c)
|
to the extent such party has granted Liens or security interests on any of its properties or assets pursuant to any of the Loan Documents to secure the prompt and complete payment, performance and/or observance of all or any part of its Obligations to the Administrative Agent, the Lenders, and/or any other Secured Party, acknowledges, ratifies, remakes, regrants, confirms and reaffirms without condition, all Liens and security interests granted by such Loan Party to the Administrative Agent for their benefit and the benefit of the Lenders, pursuant to the Credit Agreement and the other Loan Documents, and acknowledges and agrees that all of such Liens and security interests are intended and shall be deemed and construed to continue to secure the Obligations under the Loan Documents, as amended, restated, supplemented or otherwise modified and in effect from time to time, including but not limited to, the Loans made by, and Letters of Credit provided by, the Administrative Agent and the Lenders to the Borrower and/or the other Loan Parties under the Credit Agreement, and all extensions renewals, refinancings, amendments or modifications of any of the foregoing;
|
(d)
|
agrees that this Amendment shall in no manner impair or otherwise adversely affect any of the Liens and security interests granted in or pursuant to the Loan Documents; and
|
(e)
|
acknowledges and agrees that: (i) the Guaranty and any obligations incurred thereunder, have been provided in exchange for “reasonably equivalent value” (as such term is used under the Bankruptcy Code and applicable state fraudulent transfer laws) and “fair consideration” (as such term is used under applicable state fraudulent conveyance laws) and (ii) each grant or perfection of a Lien or security interest on any Collateral provided in connection with Loan Documents, this Amendment and/or any negotiations with the Administrative Agent and/or the Lenders in connection with a “workout” of the Obligations is intended to constitute, and does constitute, a “contemporaneous exchange for new value” (as such term is used in section 547 of the Bankruptcy Code).
|
8.
|
Releases; Waivers.
|
9.
|
Entire Agreement.
|
10.
|
Full Force and Effect of Credit Agreement.
|
11.
|
Counterparts; Effectiveness.
|
12.
|
Governing Law; Jurisdiction; Waiver of Jury Trial.
|
13.
|
Severability.
|
14.
|
References.
|
15.
|
Successors and Assigns.
|
16.
|
Lender Acknowledgment.
|
17.
|
Amendments.
|
18.
|
Post-Closing Agreement.
|
1.
|
Amendments to the Credit Agreement.
|
2.
|
Effectiveness; Conditions Precedent.
|
(a)
|
the Administrative Agent shall have received each of the following documents or instruments in form and substance acceptable to the Administrative Agent:
|
(i)
|
counterparts of this Amendment executed by the Loan Parties, the Administrative Agent, and the Required Lenders;
|
(ii)
|
a certificate of the chief financial officer or treasurer of the Borrower certifying that as of the Amendment No. 10 Effective Date (A) all of the representations and warranties in this Amendment are true and correct in all material respects (or, to the extent any such representation and warranty is modified by a materiality or Material Adverse Effect standard, in all respects) as of such date (except to the extent that such representations and warranties expressly relate to an earlier date, in which case they shall be true and correct in all material respects (or, to the extent any such representation and warranty is modified by a materiality or Material Adverse Effect standard, in all respects) as of such earlier date), (B) no Default shall exist on, or would result from the occurrence of, the Amendment No. 10 Effective Date and (C) that since December 31, 2017, there have not occurred any facts, circumstances, changes, developments or events which, individually or in the aggregate, have constituted or would reasonably be expected to result in, a Material Adverse Effect; and
|
(iii)
|
a solvency certificate, executed by a Responsible Officer of the Borrower in form and substance reasonably acceptable to the Administrative Agent, which, among other things, shall certify that the Borrower will be Solvent as of the date hereof and after giving effect to the consummation of the Orion Sale (as defined in Amendment No. 7), on a pro forma basis; and
|
(b)
|
without prejudice to, or limiting the Borrower’s obligations under, Section 10.04 (
Expenses; Indemnity; Damage Waiver
) of the Credit Agreement, all outstanding fees, costs and expenses due to the Administrative Agent and the Revolving Credit Lenders, including on account of Freshfields Bruckhaus Deringer US LLP and FTI, shall have been paid in full to the extent that the Borrower has received an invoice therefor (with reasonable and customary supporting documentation) at least two Business Days prior to the Amendment No. 10 Effective Date (without prejudice to any post-closing settlement of such fees, costs and expenses to the extent not so invoiced); and
|
(c)
|
each of the representations and warranties made by the Borrower in Section 3 hereof shall be true and correct.
|
3.
|
Representations and Warranties.
|
(a)
|
that both immediately prior to and immediately after giving effect to this Amendment, no Default exists;
|
(b)
|
the representations and warranties contained in the Credit Agreement are true and correct in all material respects on and as of the date hereof (except to the extent that such representations and warranties (i) specifically refer to an earlier date, in which case they shall be true and correct in all material respects as of such earlier date and (ii) contain a materiality or Material Adverse Effect qualifier, in which case such representations and warranties shall be true and correct in all respects);
|
(c)
|
the execution, delivery and performance by the Borrower and the other Loan Parties of this Amendment and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate, limited liability company or partnership action, including the consent of shareholders, partners and members where required, do not contravene any Loan Party or any of its Subsidiaries’ respective Constituent Documents, do not violate any Requirement of Law applicable to any Loan Party or any order or decree of any Governmental Authority or arbiter applicable to any Loan Party and do not require the consent of, authorization by, approval of, notice to, or filing or registration with, any Governmental Authority or any other Person in order to be effective and enforceable;
|
(d)
|
this Amendment has been duly executed and delivered on behalf of the Borrower and the other Loan Parties;
|
(e)
|
this Amendment constitutes a legal, valid and binding obligation of the Borrower and the other Loan Parties enforceable against the Borrower and the other Loan Parties in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, Debtor Relief Laws or similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity; and
|
(f)
|
as of the date hereof, all Liens, security interests, assignments and pledges encumbering the Collateral, created pursuant to and/or referred to in the Credit Agreement or the other Loan Documents, are valid, enforceable, duly perfected to the extent required by the Loan Documents, non-avoidable, first priority liens, security interests, assignments and pledges (subject to Liens permitted by Section 7.02 of the Credit Agreement), continue unimpaired, are in full force and effect and secure and shall continue to secure all of the obligations purported to be secured in the respective Security Instruments pursuant to which such Liens were granted.
|
4.
|
Consent, Acknowledgement and Reaffirmation of Indebtedness and Liens.
|
(a)
|
expressly consents to the amendments and modifications to the Credit Agreement effected hereby;
|
(b)
|
expressly confirms and agrees that, notwithstanding the effectiveness of this Amendment, each Loan Document to which it is a party is, and all of the obligations and liabilities of such Loan Party to the Administrative Agent, the Lenders and each other Secured Party contained in the Loan Documents to which it is a party (in each case, as amended and modified by this Amendment), are and shall continue to be, in full force and effect and are hereby reaffirmed, ratified and confirmed in all respects and, without limiting the foregoing, agrees to be bound by and abide by and operate and perform under and pursuant to and comply fully with all of the terms, conditions, provisions, agreements, representations, undertakings, warranties, indemnities, guaranties, grants of security interests and covenants contained in the Loan Documents;
|
(c)
|
to the extent such party has granted Liens or security interests on any of its properties or assets pursuant to any of the Loan Documents to secure the prompt and complete payment, performance and/or observance of all or any part of its Obligations to the Administrative Agent, the Lenders, and/or any other Secured Party, acknowledges, ratifies, remakes, regrants, confirms and reaffirms without condition, all Liens and security interests granted by such Loan Party to the Administrative Agent for their benefit and the benefit of the Lenders, pursuant to the Credit Agreement and the other Loan Documents, and acknowledges and agrees that all of such Liens and security interests are intended and shall be deemed and construed to continue to secure the Obligations under the Loan Documents, as amended, restated, supplemented or otherwise modified and in effect from time to time, including but not limited to, the Loans made by, and Letters of Credit provided by, the Administrative Agent and the Lenders to the Borrower and/or the other Loan Parties under the Credit Agreement, and all extensions renewals, refinancings, amendments or modifications of any of the foregoing;
|
(d)
|
agrees that this Amendment shall in no manner impair or otherwise adversely affect any of the Liens and security interests granted in or pursuant to the Loan Documents; and
|
(e)
|
acknowledges and agrees that: (i) the Guaranty and any obligations incurred thereunder, have been provided in exchange for “reasonably equivalent value” (as such term is used under the Bankruptcy Code and applicable state fraudulent transfer laws) and “fair consideration” (as such term is used under applicable state fraudulent conveyance laws) and (ii) each grant or perfection of a Lien or security interest on any Collateral provided in connection with Loan Documents, this Amendment and/or any negotiations with the Administrative Agent and/or the Lenders in connection with a “workout” of the Obligations is intended to constitute, and does constitute, a “contemporaneous exchange for new value” (as such term is used in section 547 of the Bankruptcy Code).
|
5.
|
Releases; Waivers.
|
(a)
|
By its execution hereof, each Loan Party (on behalf of itself and its Affiliates) and its successors-in-title, legal representatives and assignees and, to the extent the same is claimed by right of, through or under any Loan Party, for its past, present and future employees, agents, representatives, officers, directors, shareholders, and trustees (each, a “
Releasing Party
” and collectively, the “
Releasing Parties
”), does hereby remise, release and discharge, and shall be deemed to have forever remised, released and discharged, the Administrative Agent, the Lenders and each of the other Secured Parties, and the Administrative Agent’s, each Lenders’ and each other Secured Party’s respective successors-in-title, legal representatives and assignees, past, present and future officers, directors, affiliates, shareholders, trustees, agents, employees, consultants, experts, advisors, attorneys and other professionals and all other persons and entities to whom any of the foregoing would be liable if such persons or entities were found to be liable to any Releasing Party, or any of them (collectively hereinafter the “
Lender Parties
”), from any and all manner of action and actions, cause and causes of action, claims, charges, demands, counterclaims, suits, covenants, controversies, damages, judgments, expenses, liens, claims of liens, claims of costs, penalties, attorneys’ fees, or any other compensation, recovery or relief on account of any liability, obligation, demand or cause of action of whatever nature, whether in law, equity or otherwise (including, without limitation, any so called “lender liability” claims, claims for subordination (whether equitable or otherwise), interest or other carrying costs, penalties, legal, accounting and other professional fees and expenses and incidental, consequential and punitive damages payable to third parties, or any claims arising under 11 U.S.C. §§ 541-550 or any claims for avoidance or recovery under any other federal, state or foreign law equivalent), whether known or unknown, fixed or contingent, joint and/or several, secured or unsecured, due or not due, primary or secondary, liquidated or unliquidated, contractual or tortious, direct, indirect, or derivative, asserted or unasserted, foreseen or unforeseen, suspected or unsuspected, now existing, heretofore existing or which may heretofore have accrued against any of the Lender Parties under the Credit Agreement or any of the other Loan Documents, whether held in a personal or representative capacity, and which are based on any act, fact, event or omission or other matter, cause or thing occurring at or from any time prior to and including the date hereof, in all cases of the foregoing in any way, directly or indirectly arising out of, connected with or relating to the Credit Agreement or any other Loan Document and the transactions contemplated thereby, and all other agreements, certificates, instruments and other documents and statements (whether written or oral) related to any of the foregoing (each, a “Claim” and collectively, the “Claims”), in each case, other than Claims arising from Lender Parties’ gross negligence, fraud, or willful misconduct.
Each Releasing Party further stipulates and agrees with respect to all Claims, that it hereby waives, to the fullest extent permitted by applicable law, any and all provisions, rights, and benefits conferred by any applicable U.S. federal or state law, or any principle of common law, that would otherwise limit a release or discharge of any unknown Claims pursuant to this Section 5.
|
(b)
|
By its execution hereof, each Loan Party hereby (i) acknowledges and confirms that there are no existing defenses, claims, subordinations (whether equitable or otherwise), counterclaims or rights of recoupment or setoff against the Administrative Agent, the Lenders or any other Secured Parties in connection with the Obligations or in connection with the negotiation, preparation, execution, performance or any other matters relating to the Credit Agreement, the other Loan Documents or this Amendment and (ii) expressly waives any setoff, counterclaim, recoupment, defense or other right that such Loan Party now has against the Administrative Agent, any Lender or any of their respective affiliates, whether in connection with this Amendment, the Credit Agreement and the other Loan Documents, the transactions contemplated by this Amendment or the Credit Agreement and the Loan Documents, or any agreement or instrument relating thereto.
|
6.
|
Entire Agreement.
|
7.
|
Full Force and Effect of Credit Agreement.
|
8.
|
Counterparts; Effectiveness.
|
9.
|
Governing Law; Jurisdiction; Waiver of Jury Trial.
|
10.
|
Severability.
|
11.
|
References.
|
12.
|
Successors and Assigns.
|
13.
|
Lender Acknowledgment.
|
14.
|
Amendments.
|
1.
|
Amendments to the Credit Agreement.
|
(a)
|
Clause (b)(vii) of the definition of “EBITDA” in Section 1.01 (
Defined Terms
) of the Credit Agreement shall be amended by inserting the text underlined below and deleting the text stricken below to read in its entirety as follows:
|
(b)
|
Clause (b)(xii) of the definition of “EBITDA” in Section 1.01 (
Defined Terms
) of the Credit Agreement shall be amended by inserting the text underlined below and deleting the text stricken below to read in its entirety as follows:
|
(c)
|
Clause (a)(vii) of Section 2.03 (
Letters of Credit
) of the Credit Agreement shall be amended by inserting the text underlined below and deleting the text stricken below to read in its entirety as follows:
|
(d)
|
Section 3.03 (
Inability to Determine Rates
) of the Credit Agreement shall be amended by inserting the text underlined below and deleting the text stricken below to read in its entirety as follows:
|
(e)
|
Section 3.03 (
Inability to Determine Rates
) of the Credit Agreement shall be further amended by adding the following clause (c):
|
(f)
|
Section 6.34 (
Completion of Vølund Project Milestones
) of the Credit Agreement shall be amended and restated in its entirety as follows:
|
(g)
|
Section 7.19 (
Additional Charges
) shall be amended by inserting the text underlined below and deleting the text stricken below to read in its entirety as follows:
|
(h)
|
The first paragraph of Section 10.01 (
Amendments, Etc.
) shall be amended by inserting the text underlined below and deleting the text stricken below to read in its entirety as follows:
|
2.
|
Amendment Fees
|
3.
|
Effectiveness; Conditions Precedent.
|
(a)
|
the Administrative Agent shall have received each of the following documents or instruments in form and substance acceptable to the Administrative Agent:
|
(i)
|
counterparts of this Amendment executed by the Loan Parties, the Administrative Agent, and the Required Lenders;
|
(ii)
|
a certificate of the chief financial officer or treasurer of the Borrower certifying that as of the Amendment No. 11 Effective Date (A) all of the representations and warranties in this Amendment are true and correct in all material respects (or, to the extent any such representation and warranty is modified by a materiality or Material Adverse Effect standard, in all respects) as of such date (except to the extent that such representations and warranties expressly relate to an earlier date, in which case they shall be true and correct in all material respects (or, to the extent any such representation and warranty is modified by a materiality or Material Adverse Effect standard, in all respects) as of such earlier date), (B) no Default shall exist on, or would result from the occurrence of, the Amendment No. 11 Effective Date and (C) that since December 31, 2017, there have not occurred any facts, circumstances, changes, developments or events which, individually or in the aggregate, have constituted or would reasonably be expected to result in, a Material Adverse Effect; and
|
(iii)
|
a solvency certificate, executed by a Responsible Officer of the Borrower in form and substance reasonably acceptable to the Administrative Agent, which, among other things, shall certify that the Borrower will be Solvent as of the date hereof and after giving effect to the consummation of the Orion Sale (as defined in Amendment No. 7), on a pro forma basis; and
|
(b)
|
without prejudice to, or limiting the Borrower’s obligations under, Section 10.04 (
Expenses; Indemnity; Damage Waiver
) of the Credit Agreement, all outstanding fees, costs and expenses due to the Administrative Agent and the Revolving Credit Lenders, including on account of Freshfields Bruckhaus Deringer US LLP and FTI, shall have been paid in full to the extent that the Borrower has received an invoice therefor (with reasonable and customary supporting documentation) at least two Business Days prior to the Amendment No. 11 Effective Date (without prejudice to any post-closing settlement of such fees, costs and expenses to the extent not so invoiced); and
|
(c)
|
each of the representations and warranties made by the Borrower in Section 4 hereof shall be true and correct.
|
(d)
|
the Administrative Agent shall have received on account of each Revolving Credit Lender that consents to this Amendment, the Revolving Credit Lender Amendment Fees.
|
4.
|
Representations and Warranties.
|
(a)
|
that both immediately prior to and immediately after giving effect to this Amendment, no Default exists;
|
(b)
|
the representations and warranties contained in the Credit Agreement are true and correct in all material respects on and as of the date hereof (except to the extent that such representations and warranties (i) specifically refer to an earlier date, in which case they shall be true and correct in all material respects as of such earlier date and (ii) contain a materiality or Material Adverse Effect qualifier, in which case such representations and warranties shall be true and correct in all respects);
|
(c)
|
the execution, delivery and performance by the Borrower and the other Loan Parties of this Amendment and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate, limited liability company or partnership action, including the consent of shareholders, partners and members where required, do not contravene any Loan Party or any of its Subsidiaries’ respective Constituent Documents, do not violate any Requirement of Law applicable to any Loan Party or any order or decree of any Governmental Authority or arbiter applicable to any Loan Party and do not require the consent of, authorization by, approval of, notice to, or filing or registration with, any Governmental Authority or any other Person in order to be effective and enforceable;
|
(d)
|
this Amendment has been duly executed and delivered on behalf of the Borrower and the other Loan Parties;
|
(e)
|
this Amendment constitutes a legal, valid and binding obligation of the Borrower and the other Loan Parties enforceable against the Borrower and the other Loan Parties in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, Debtor Relief Laws or similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity; and
|
(f)
|
as of the date hereof, all Liens, security interests, assignments and pledges encumbering the Collateral, created pursuant to and/or referred to in the Credit Agreement or the other Loan Documents, are valid, enforceable, duly perfected to the extent required by the Loan Documents, non-avoidable, first priority liens, security interests, assignments and pledges (subject to Liens permitted by Section 7.02 of the Credit Agreement), continue unimpaired, are in full force and effect and secure and shall continue to secure all of the obligations purported to be secured in the respective Security Instruments pursuant to which such Liens were granted.
|
5.
|
Consent, Acknowledgement and Reaffirmation of Indebtedness and Liens.
|
(a)
|
expressly consents to the amendments and modifications to the Credit Agreement effected hereby;
|
(b)
|
expressly confirms and agrees that, notwithstanding the effectiveness of this Amendment, each Loan Document to which it is a party is, and all of the obligations and liabilities of such Loan Party to the Administrative Agent, the Lenders and each other Secured Party contained in the Loan Documents to which it is a party (in each case, as amended and modified by this Amendment), are and shall continue to be, in full force and effect and are hereby reaffirmed, ratified and confirmed in all respects and, without limiting the foregoing, agrees to be bound by and abide by and operate and perform under and pursuant to and comply fully with all of the terms, conditions, provisions, agreements, representations, undertakings, warranties, indemnities, guaranties, grants of security interests and covenants contained in the Loan Documents;
|
(c)
|
to the extent such party has granted Liens or security interests on any of its properties or assets pursuant to any of the Loan Documents to secure the prompt and complete payment, performance and/or observance of all or any part of its Obligations to the Administrative Agent, the Lenders, and/or any other Secured Party, acknowledges, ratifies, remakes, regrants, confirms and reaffirms without condition, all Liens and security interests granted by such Loan Party to the Administrative Agent for their benefit and the benefit of the Lenders, pursuant to the Credit Agreement and the other Loan Documents, and acknowledges and agrees that all of such Liens and security interests are intended and shall be deemed and construed to continue to secure the Obligations under the Loan Documents, as amended, restated, supplemented or otherwise modified and in effect from time to time, including but not limited to, the Loans made by, and Letters of Credit provided by, the Administrative Agent and the Lenders to the Borrower and/or the other Loan Parties under the Credit Agreement, and all extensions renewals, refinancings, amendments or modifications of any of the foregoing;
|
(d)
|
agrees that this Amendment shall in no manner impair or otherwise adversely affect any of the Liens and security interests granted in or pursuant to the Loan Documents; and
|
(e)
|
acknowledges and agrees that: (i) the Guaranty and any obligations incurred thereunder, have been provided in exchange for “reasonably equivalent value” (as such term is used under the Bankruptcy Code and applicable state fraudulent transfer laws) and “fair consideration” (as such term is used under applicable state fraudulent conveyance laws) and (ii) each grant or perfection of a Lien or security interest on any Collateral provided in connection with Loan Documents, this Amendment and/or any negotiations with the Administrative Agent and/or the Lenders in connection with a “workout” of the Obligations is intended to constitute, and does constitute, a “contemporaneous exchange for new value” (as such term is used in Section 547 of the Bankruptcy Code).
|
6.
|
Releases; Waivers.
|
(a)
|
By its execution hereof, each Loan Party (on behalf of itself and its Affiliates) and its successors-in-title, legal representatives and assignees and, to the extent the same is claimed by right of, through or under any Loan Party, for its past, present and future employees, agents, representatives, officers, directors, shareholders, and trustees (each, a “
Releasing Party
” and collectively, the “
Releasing Parties
”), does hereby remise, release and discharge, and shall be deemed to have forever remised, released and discharged, the Administrative Agent, the Lenders and each of the other Secured Parties, and the Administrative Agent’s, each Lenders’ and each other Secured Party’s respective successors-in-title, legal representatives and assignees, past, present and future officers, directors, affiliates, shareholders, trustees, agents, employees, consultants, experts, advisors, attorneys and other professionals and all other persons and entities to whom any of the foregoing would be liable if such persons or entities were found to be liable to any Releasing Party, or any of them (collectively hereinafter the “
Lender Parties
”), from any and all manner of action and actions, cause and causes of action, claims, charges, demands, counterclaims, suits, covenants, controversies, damages, judgments, expenses, liens, claims of liens, claims of costs, penalties, attorneys’ fees, or any other compensation, recovery or relief on account of any liability, obligation, demand or cause of action of whatever nature, whether in law, equity or otherwise (including, without limitation, any so called “lender liability” claims, claims for subordination (whether equitable or otherwise), interest or other carrying costs, penalties, legal, accounting and other professional fees and expenses and incidental, consequential and punitive damages payable to third parties, or any claims arising under 11 U.S.C. §§ 541-550 or any claims for avoidance or recovery under any other federal, state or foreign law equivalent), whether known or unknown, fixed or contingent, joint and/or several, secured or unsecured, due or not due, primary or secondary, liquidated or unliquidated, contractual or tortious, direct, indirect, or derivative, asserted or unasserted, foreseen or unforeseen, suspected or unsuspected, now existing, heretofore existing or which may heretofore have accrued against any of the Lender Parties under the Credit Agreement or any of the other Loan Documents, whether held in a personal or representative capacity, and which are based on any act, fact, event or omission or other matter, cause or thing occurring at or from any time prior to and including the date hereof, in all cases of the foregoing in any way, directly or indirectly arising out of, connected with or relating to the Credit Agreement or any other Loan Document and the transactions contemplated thereby, and all other agreements, certificates, instruments and other documents and statements (whether written or oral) related to any of the foregoing (each, a “Claim” and collectively, the “Claims”), in each case, other than Claims arising from Lender Parties’ gross negligence, fraud, or willful misconduct.
Each Releasing Party further stipulates and agrees with respect to all Claims, that it hereby waives, to the fullest extent permitted by applicable law, any and all provisions, rights, and benefits conferred by any applicable U.S. federal or state law, or any principle of common law, that would otherwise limit a release or discharge of any unknown Claims pursuant to this Section 6.
|
(b)
|
By its execution hereof, each Loan Party hereby (i) acknowledges and confirms that there are no existing defenses, claims, subordinations (whether equitable or otherwise), counterclaims or rights of recoupment or setoff against the Administrative Agent, the Lenders or any other Secured Parties in connection with the Obligations or in connection with the negotiation, preparation, execution, performance or any other matters relating to the Credit Agreement, the other Loan Documents or this Amendment and (ii) expressly waives any setoff, counterclaim, recoupment, defense or other right that such Loan Party now has against the Administrative Agent, any Lender or any of their respective affiliates, whether in connection with this Amendment, the Credit Agreement and the other Loan Documents, the transactions contemplated by this Amendment or the Credit Agreement and the Loan Documents, or any agreement or instrument relating thereto.
|
7.
|
Entire Agreement.
|
8.
|
Full Force and Effect of Credit Agreement.
|
9.
|
Counterparts; Effectiveness.
|
10.
|
Governing Law; Jurisdiction; Waiver of Jury Trial.
|
11.
|
Severability.
|
12.
|
References.
|
13.
|
Successors and Assigns.
|
14.
|
Lender Acknowledgment.
|
15.
|
Amendments.
|
Project
|
Milestone(s)/Date
|
ARC
|
Preliminary Takeover / January 31, 2019
|
SKV40
|
Takeover / October 31, 2018
|
Templeborough
|
Takeover / November 30, 2018
|
Margam
|
Takeover / December 15, 2018
|
Teesside
|
• Successful completion of G59 Test / September 30, 2018
• Takeover / October 31, 2019
|
Dunbar
|
Takeover / November 30, 2018
|
1.
|
Amendments to the Credit Agreement.
|
(a)
|
Section 1.01 (
Defined Terms
) of the Credit Agreement shall be amended by inserting the following new definitions in the appropriate alphabetical order in Section 1.01:
|
(b)
|
Clause (b) of the definition of “EBITDA” in Section 1.01 (
Defined Terms
) of the Credit Agreement shall be amended by inserting the text underlined below to read in its entirety as follows:
|
(c)
|
Clause (b)(vii) of the definition of “EBITDA” in Section 1.01 (
Defined Terms
) of the Credit Agreement shall be amended by inserting the text underlined below and deleting the text stricken below to read in its entirety as follows:
|
(d)
|
Clause (b)(xii) of the definition of “EBITDA” in Section 1.01 (
Defined Terms
) of the Credit Agreement shall be amended by inserting the text underlined below and deleting the text stricken below to read in its entirety as follows:
|
(e)
|
Clause (b)(vi) of Section 2.05 (
Prepayments
) shall be amended by inserting the text underlined below and deleting the text stricken below to read in its entirety as follows:
|
(f)
|
Clause (e)(iii) of Section 4.03 (
Conditions to Revolving Credit Extensions
) shall be amended by inserting the text underlined below and deleting the text stricken below to read in its entirety as follows:
|
(g)
|
Section 6.34 (
Completion of Vølund Project Milestones
) of the Credit Agreement shall be amended and restated in its entirety as follows:
|
(h)
|
Section 6.38 (
Project Concessions
) of the Credit Agreement is hereby amended by inserting the text underlined below and deleting the text stricken below to read in its entirety as follows:
|
(i)
|
Section 7.16 (
Financial Covenants
) of the Credit Agreement shall be amended and restated in its entirety as follows:
|
Fiscal Quarters Ending
|
Minimum Interest Coverage Ratio
|
September 30, 2018
|
1.00:1:00
|
December 31, 2018
|
1.00:1:00
|
March 31, 2019
|
2.25:1:00
|
June 30, 2019
|
3.00:1:00
|
September 30, 2019
|
3.25:1:00
|
December 31, 2019 and the last day of each Fiscal Quarter ending thereafter
|
3.25:1:00
|
Fiscal Quarters Ending
|
Maximum Senior Leverage Ratio
|
September 30, 2018
|
9.75:1:00
|
December 31, 2018
|
9.00:1:00
|
March 31, 2019
|
4.00:1:00
|
June 30, 2019
|
3.50:1:00
|
September 30, 2019
|
3.00:1:00
|
December 31, 2019 and the last day of each Fiscal Quarter ending thereafter
|
3.00:1:00
|
(j)
|
Section 7.18 (
Minimum Liquidity
) of the Credit Agreement is hereby amended by inserting the text underlined below and deleting the text stricken below to read in its entirety as follows:
|
2.
|
Additional Agreements and Acknowledgments
|
3.
|
Effectiveness; Conditions Precedent.
|
(a)
|
the Administrative Agent shall have received each of the following documents or instruments in form and substance acceptable to the Administrative Agent:
|
(i)
|
counterparts of this Amendment executed by the Loan Parties, the Administrative Agent, and the Required Lenders;
|
(ii)
|
a certificate of the chief financial officer or treasurer of the Borrower certifying that as of the Amendment No. 12 Effective Date (A) all of the representations and warranties in this Amendment are true and correct in all material respects (or, to the extent any such representation and warranty is modified by a materiality or Material Adverse Effect standard, in all respects) as of such date (except to the extent that such representations and warranties expressly relate to an earlier date, in which case they shall be true and correct in all material respects (or, to the extent any such representation and warranty is modified by a materiality or Material Adverse Effect standard, in all respects) as of such earlier date), (B) no Default shall exist on, or would result from the occurrence of, the Amendment No. 12 Effective Date and (C) that since December 31, 2017, there have not occurred any facts, circumstances, changes, developments or events which, individually or in the aggregate, have constituted or would reasonably be expected to result in, a Material Adverse Effect; and
|
(iii)
|
satisfactory opinions of each of Loan Parties’ counsels regarding, among other items, due execution, enforceability and non-contravention of law, in form and substance satisfactory to the Administrative Agent and any other opinion from local counsel reasonably requested by the Administrative Agent (which opinions shall also retroactively cover the above described scope with respect to Amendment No. 11); and
|
(iv)
|
a solvency certificate, executed by a Responsible Officer of the Borrower in form and substance reasonably acceptable to the Administrative Agent, which, among other things, shall certify that the Borrower will be Solvent as of the date hereof; and
|
(b)
|
without prejudice to, or limiting the Borrower’s obligations under, Section 10.04 (
Expenses; Indemnity; Damage Waiver
) of the Credit Agreement, all outstanding fees, costs and expenses due to the Administrative Agent and the Revolving Credit Lenders, including on account of Freshfields Bruckhaus Deringer US LLP and FTI, shall have been paid in full to the extent that the Borrower has received an invoice therefor (with reasonable and customary supporting documentation) at least two Business Days prior to the Amendment No. 12 Effective Date (without prejudice to any post-closing settlement of such fees, costs and expenses to the extent not so invoiced); and
|
(c)
|
each of the representations and warranties made by the Borrower in
Section 4
hereof shall be true and correct; and
|
(d)
|
the Administrative Agent shall have received on account of each Revolving Credit Lender that consents to this Amendment, the Amendment Fees.
|
4.
|
Representations and Warranties.
|
(a)
|
that both immediately prior to and immediately after giving effect to this Amendment, no Default exists;
|
(b)
|
the representations and warranties contained in the Credit Agreement are true and correct in all material respects on and as of the date hereof (except to the extent that such representations and warranties (i) specifically refer to an earlier date, in which case they shall be true and correct in all material respects as of such earlier date and (ii) contain a materiality or Material Adverse Effect qualifier, in which case such representations and warranties shall be true and correct in all respects);
|
(c)
|
the execution, delivery and performance by the Borrower and the other Loan Parties of this Amendment and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate, limited liability company or partnership action, including the consent of shareholders, partners and members where required, do not contravene any Loan Party or any of its Subsidiaries’ respective Constituent Documents, do not violate any Requirement of Law applicable to any Loan Party or any order or decree of any Governmental Authority or arbiter applicable to any Loan Party and do not require the consent of, authorization by, approval of, notice to, or filing or registration with, any Governmental Authority or any other Person in order to be effective and enforceable;
|
(d)
|
this Amendment has been duly executed and delivered on behalf of the Borrower and the other Loan Parties;
|
(e)
|
this Amendment constitutes a legal, valid and binding obligation of the Borrower and the other Loan Parties enforceable against the Borrower and the other Loan Parties in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, Debtor Relief Laws or similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity; and
|
(f)
|
as of the date hereof, all Liens, security interests, assignments and pledges encumbering the Collateral, created pursuant to and/or referred to in the Credit Agreement or the other Loan Documents, are valid, enforceable, duly perfected to the extent required by the Loan Documents, non-avoidable, first priority liens, security interests, assignments and pledges (subject to Liens permitted by Section 7.02 of the Credit Agreement), continue unimpaired, are in full force and effect and secure and shall continue to secure all of the obligations purported to be secured in the respective Security Instruments pursuant to which such Liens were granted.
|
5.
|
Consent, Acknowledgement and Reaffirmation of Indebtedness and Liens.
|
(a)
|
expressly consents to the amendments and modifications to the Credit Agreement effected hereby;
|
(b)
|
expressly confirms and agrees that, notwithstanding the effectiveness of this Amendment, each Loan Document to which it is a party is, and all of the obligations and liabilities of such Loan Party to the Administrative Agent, the Lenders and each other Secured Party contained in the Loan Documents to which it is a party (in each case, as amended and modified by this Amendment), are and shall continue to be, in full force and effect and are hereby reaffirmed, ratified and confirmed in all respects and, without limiting the foregoing, agrees to be bound by and abide by and operate and perform under and pursuant to and comply fully with all of the terms, conditions, provisions, agreements, representations, undertakings, warranties, indemnities, guaranties, grants of security interests and covenants contained in the Loan Documents;
|
(c)
|
to the extent such party has granted Liens or security interests on any of its properties or assets pursuant to any of the Loan Documents to secure the prompt and complete payment, performance and/or observance of all or any part of its Obligations to the Administrative Agent, the Lenders, and/or any other Secured Party, acknowledges, ratifies, remakes, regrants, confirms and reaffirms without condition, all Liens and security interests granted by such Loan Party to the Administrative Agent for their benefit and the benefit of the Lenders, pursuant to the Credit Agreement and the other Loan Documents, and acknowledges and agrees that all of such Liens and security interests are intended and shall be deemed and construed to continue to secure the Obligations under the Loan Documents, as amended, restated, supplemented or otherwise modified and in effect from time to time, including but not limited to, the Loans made by, and Letters of Credit provided by, the Administrative Agent and the Lenders to the Borrower and/or the other Loan Parties under the Credit Agreement, and all extensions renewals, refinancings, amendments or modifications of any of the foregoing;
|
(d)
|
agrees that this Amendment shall in no manner impair or otherwise adversely affect any of the Liens and security interests granted in or pursuant to the Loan Documents; and
|
(e)
|
acknowledges and agrees that: (i) the Guaranty and any obligations incurred thereunder, have been provided in exchange for “reasonably equivalent value” (as such term is used under the Bankruptcy Code and applicable state fraudulent transfer laws) and “fair consideration” (as such term is used under applicable state fraudulent conveyance laws) and (ii) each grant or perfection of a Lien or security interest on any Collateral provided in connection with Loan Documents, this Amendment and/or any negotiations with the Administrative Agent and/or the Lenders in connection with a “workout” of the Obligations is intended to constitute, and does constitute, a “contemporaneous exchange for new value” (as such term is used in Section 547 of the Bankruptcy Code).
|
6.
|
Releases; Waivers.
|
(a)
|
By its execution hereof, each Loan Party (on behalf of itself and its Affiliates) and its successors-in-title, legal representatives and assignees and, to the extent the same is claimed by right of, through or under any Loan Party, for its past, present and future employees, agents, representatives, officers, directors, shareholders, and trustees (each, a “
Releasing Party
” and collectively, the “
Releasing Parties
”), does hereby remise, release and discharge, and shall be deemed to have forever remised, released and discharged, the Administrative Agent, the Lenders and each of the other Secured Parties, and the Administrative Agent’s, each Lenders’ and each other Secured Party’s respective successors-in-title, legal representatives and assignees, past, present and future officers, directors, affiliates, shareholders, trustees, agents, employees, consultants, experts, advisors, attorneys and other professionals and all other persons and entities to whom any of the foregoing would be liable if such persons or entities were found to be liable to any Releasing Party, or any of them (collectively hereinafter the “
Lender Parties
”), from any and all manner of action and actions, cause and causes of action, claims, charges, demands, counterclaims, suits, covenants, controversies, damages, judgments, expenses, liens, claims of liens, claims of costs, penalties, attorneys’ fees, or any other compensation, recovery or relief on account of any liability, obligation, demand or cause of action of whatever nature, whether in law, equity or otherwise (including, without limitation, any so called “lender liability” claims, claims for subordination (whether equitable or otherwise), interest or other carrying costs, penalties, legal, accounting and other professional fees and expenses and incidental, consequential and punitive damages payable to third parties, or any claims arising under 11 U.S.C. §§ 541-550 or any claims for avoidance or recovery under any other federal, state or foreign law equivalent), whether known or unknown, fixed or contingent, joint and/or several, secured or unsecured, due or not due, primary or secondary, liquidated or unliquidated, contractual or tortious, direct, indirect, or derivative, asserted or unasserted, foreseen or unforeseen, suspected or unsuspected, now existing, heretofore existing or which may heretofore have accrued against any of the Lender Parties under the Credit Agreement or any of the other Loan Documents, whether held in a personal or representative capacity, and which are based on any act, fact, event or omission or other matter, cause or thing occurring at or from any time prior to and including the date hereof, in all cases of the foregoing in any way, directly or indirectly arising out of, connected with or relating to the Credit Agreement or any other Loan Document and the transactions contemplated thereby, and all other agreements, certificates, instruments and other documents and statements (whether written or oral) related to any of the foregoing (each, a “Claim” and collectively, the “Claims”), in each case, other than Claims arising from Lender Parties’ gross negligence, fraud, or willful misconduct.
Each Releasing Party further stipulates and agrees with respect to all Claims, that it hereby waives, to the fullest extent permitted by applicable law, any and all provisions, rights, and benefits conferred by any applicable U.S. federal or state law, or any principle of common law, that would otherwise limit a release or discharge of any unknown Claims pursuant to this Section 6.
|
(b)
|
By its execution hereof, each Loan Party hereby (i) acknowledges and confirms that there are no existing defenses, claims, subordinations (whether equitable or otherwise), counterclaims or rights of recoupment or setoff against the Administrative Agent, the Lenders or any other Secured Parties in connection with the Obligations or in connection with the negotiation, preparation, execution, performance or any other matters relating to the Credit Agreement, the other Loan Documents or this Amendment and (ii) expressly waives any setoff, counterclaim, recoupment, defense or other right that such Loan Party now has against the Administrative Agent, any Lender or any of their respective affiliates, whether in connection with this Amendment, the Credit Agreement and the other Loan Documents, the transactions contemplated by this Amendment or the Credit Agreement and the Loan Documents, or any agreement or instrument relating thereto.
|
7.
|
Entire Agreement.
|
8.
|
Full Force and Effect of Credit Agreement.
|
9.
|
Counterparts; Effectiveness.
|
10.
|
Governing Law; Jurisdiction; Waiver of Jury Trial.
|
11.
|
Severability.
|
12.
|
References.
|
13.
|
Successors and Assigns.
|
14.
|
Lender Acknowledgment.
|
15.
|
Amendments.
|
Project
|
Milestone(s)/Date
|
ARC
|
Preliminary Takeover / January 31, 2019
|
SKV40
|
Takeover / November 30, 2018
|
Templeborough
|
Takeover / December 31, 2018
|
Margam
|
Takeover / January 15, 2019
|
Teesside
|
Takeover / October 31, 2019
|
Dunbar
|
Takeover / December 31, 2018
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Babcock & Wilcox Enterprises, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
|
a.
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
November 8, 2018
|
/s/ Leslie C. Kass
|
|
Leslie C. Kass
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Babcock & Wilcox Enterprises, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
|
a.
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
November 8, 2018
|
/s/ Joel K. Mostrom
|
|
Joel K. Mostrom
|
|
Chief Financial Officer
|
(1)
|
the Company’s Quarterly Report on Form 10-Q for the quarter ended
September 30, 2018
(the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of B&W as of the dates and for the periods expressed in the Report.
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Dated: November 8, 2018
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/s/ Leslie C. Kass
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Leslie C. Kass
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President and Chief Executive Officer
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(1)
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the Company’s Quarterly Report on Form 10-Q for the quarter ended
September 30, 2018
(the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of B&W as of the dates and for the periods expressed in the Report.
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Dated: November 8, 2018
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/s/ Joel K. Mostrom
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Joel K. Mostrom
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Chief Financial Officer
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