Atlas Technical Consultants, Inc. (Nasdaq: ATCX) (together with its
subsidiaries, “Atlas” or the “Company”), a leading provider of
professional testing, inspection, engineering, environmental, and
consulting services, announced today a significant recapitalization
and simplification of the Company’s capital structure. The Company
has replaced its current debt and preferred equity agreements with
a new, more economically favorable term loan credit agreement
funded by funds and accounts managed or advised by Blackstone
Credit or its affiliates, consisting of $432 million of long-term
debt maturing in 2028 and a $75 million committed delayed draw term
loan. The Company also replaced its existing revolving credit
facility with a new five-year, $40 million asset based revolving
credit agreement with JPMorgan Chase Bank, N.A. (“JPMorgan Chase”).
The Company used a portion of net proceeds from the new debt to
repay all of its $270 million of outstanding borrowings under its
existing term loan, including by rolling nearly $62 million of its
existing term loans into the new term loan facility, and to redeem
in full the Company’s $154 million of outstanding Series A
preferred equity units at a redemption price of par plus accrued
and unpaid dividends.
David D. Quinn, Sr., Chief Financial Officer of
Atlas, stated, “This milestone transaction represents the latest
transformative step in our multi-year plan to streamline and
optimize our capital structure to support our growth objectives
through both organic expansion and deleveraging acquisitions.
Through these immensely beneficial actions, we are eliminating our
preferred equity, simplifying our debt structure, reducing
borrowing costs and adding financial flexibility for accretive
initiatives. We expect that this recapitalization and its projected
savings, along with disciplined cash management, will continue to
enhance the cash flow generated by our business and returns to our
shareholders. We are extremely pleased to be partnering with two of
the most respected lending partners in Blackstone and JPMorgan
Chase and appreciate their confidence in our strategy and their
deep commitment to supporting our business as we accelerate
growth.”
The transaction represents significant progress
on the Company’s near-term goal of simplifying and optimizing its
capital structure, including the following benefits:
- Fully redeems
the Company's outstanding preferred equity at par;
- Replaces the
existing debt and preferred equity structure with a single $432
million long-term loan, a $75 million committed delayed draw term
loan and a $40 million asset-based revolver with an uncommitted $20
million expansion feature, providing increased funding sources and
liquidity for growth;
- Lowers the
overall aggregate interest rate on debt by nearly 100 basis points,
including a 375-basis point reduction in the interest rate spread
on the revolver to LIBOR plus 2.50%, while eliminating the LIBOR
floor;
- Reduces
amortization on long-term debt from the current 5% annually to 0%
in year one, and 1% thereafter through the term of the loan, which
has been extended by two years to 2028;
- Decreases
average annual cash outlays on overall debt service and dividends
by an estimated $13 million in year one and $8 million
thereafter;
- Increases access
to liquidity by approximately $116 million over the next two years
to support new growth initiatives and M&A; and
- Positions Atlas
to accelerate its target net leverage reductions through
anticipated EBITDA growth by executing on the Company’s organic
growth and deleveraging M&A strategy in the coming years.
Brad Colman, Senior Managing Director of
Blackstone, stated, “We are proud to be a partner to Atlas and its
management team. Since becoming public, Atlas has demonstrated the
resilience of its business model. The Company’s strong performance
through the pandemic has further reinforced our conviction in
Atlas’ growth strategy and solid footing to produce attractive
returns.” Josh Lafer, Principal of Blackstone, added, “Through this
transaction, we believe we are further optimizing the Company’s
capital structure for continued success. With over $500 million of
committed capital from Blackstone, we believe Atlas is well
positioned for growth as we see increased investments in
transportation, infrastructure and environmental solutions across
the US over the coming years.”
L. Joe Boyer, Chief Executive Officer of Atlas,
concluded, “This transaction builds on the significant strides we
have taken to improve our capital structure since becoming a public
company. We are expanding our liquidity and unlocking additional
cash flow that puts us in an even stronger position to execute on
our deleveraging M&A strategy as an acquirer of choice. This
increased flexibility, coupled with our expanding backlog, better
positions our business to grow and to outperform as our end markets
continue to improve."
Inclusive of the Company’s warrant exchange
concluded in late 2020 and the continued conversion of Class B
common shares to Class A shares, as of February 25, 2021 the
Company has 35,280,412 common shares outstanding consisting of
15,111,978 Class A shares and 20,168,434 Class B shares.
Advisors
Thompson & Knight LLP acted as legal counsel
to Atlas, Willkie Farr & Gallagher LLP acted as legal counsel
to Blackstone and Vinson & Elkins LLP acted as legal counsel to
JPMorgan Chase.
About Atlas Technical
Consultants
Headquartered in Austin, Texas, Atlas is a
leading provider of professional testing, inspection, engineering,
environmental, program management, and consulting services. Under
the name Atlas Technical Consultants, we offer solutions to public
and private sector clients in the transportation, commercial,
water, government, education, and industrial markets. With a
nationwide footprint and more than 3,300 employees, Atlas provides
a broad range of mission-critical technical services, helping
clients test, inspect, certify, plan, design, and manage a wide
variety of projects across diverse end markets. For more
information, go to https://www.oneatlas.com.
Forward-Looking Statements
The statements contained in this press release
that are not purely historical are forward-looking statements. Our
forward-looking statements include, but are not limited to,
statements regarding our or our management team's expectations,
hopes, beliefs, intentions, or strategies regarding the future. The
information included in this press release in relation to Atlas has
been provided by Atlas and its management team, and forward-looking
statements include statements relating to Atlas' management team's
expectations, hopes, beliefs, intentions, or strategies regarding
the future. In addition, any statements that refer to projections,
forecasts, or other characterizations of future events or
circumstances, including any underlying assumptions, are
forward-looking statements. The words "anticipate," "believe,"
"continue," "could," "estimate," "expect," "intend," "may,"
"might," "plan," "possible," "potential," "predict," "project,"
"should," "would" and similar expressions may identify
forward-looking statements, but the absence of these words does not
mean that a statement is not forward-looking. The forward-looking
statements contained in this press release are based on our current
expectations and beliefs concerning future developments and their
potential effects on us and are based on management's experience
and perception of historical trends, current conditions,
anticipated future developments, and other factors believed to be
appropriate. There can be no assurance that future developments
affecting us will be those that we have anticipated. These
forward-looking statements involve a number of risks, uncertainties
(some of which are beyond our control), or other assumptions that
may cause actual results or performance to be materially different
from those expressed or implied by these forward-looking
statements. These risks and uncertainties include, but are not
limited to: (1) the effect, impact, potential duration or other
implications of the COVID-19 pandemic and any expectations we may
have with respect thereto; (2) the risk that our actual results may
differ from the guidance we have provided; (3) the ability to
recognize the anticipated benefits of our past acquisitions, which
may be affected by, among other things, competition, the ability of
the Company to grow and manage growth profitably, maintain
relationships with customers and suppliers and retain management
and key employees; (4) changes adversely affecting the business in
which we are engaged; (5) changes in applicable laws or
regulations; (6) the possibility that the Company may be adversely
affected by other economic, business, and/or competitive factors;
and (7) other risks and uncertainties indicated from time to time
in the Company’s filings with the U.S. Securities and Exchange
Commission, including those under “Risk Factors” therein.
Contacts:
MediaKarlene
Barron770-314-5270karlene.barron@oneatlas.com
Investor Relations
512-851-1507ir@oneatlas.com
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