Continues to Operate Business as Usual and
Serve Customers Across Business Segments
Restructuring Transactions to Reduce Debt by
$307 million and Provide $40 million of New Liquidity to Execute
Business Plan
Company Anticipates Plan of Reorganization
Support from at least 85% of Secured Debt Holders and 80% of
Convertible Noteholders
QualTek Services Inc. (NASDAQ: QTEK) (the “Company” or
“QualTek”), a leading infrastructure services provider, today
announced a restructuring transaction that will position it to
achieve long-term success in the telecom, renewables, and recovery
logistics sectors. The restructuring transaction reduces the
Company’s debt by approximately $307 million and provides $40
million of additional liquidity, substantially improving the
Company’s balance sheet and financial position.
To facilitate the financial restructuring, the Company and
certain of its subsidiaries have filed voluntarily petitions for
Chapter 11 cases in the United States Bankruptcy Court for the
Southern District of Texas. QualTek expects significant support of
its lenders through this process, including at least 85% of the
Company’s secured debt holders and approximately 80% of its
convertible noteholders. The Company will be filing a Restructuring
Support Agreement (“RSA”) and Plan of Reorganization (“Plan”),
which contemplates that, upon emergence from Chapter 11, there will
be new ownership comprised of the Company’s existing lenders and
management team.
“For more than a decade, QualTek has provided critical services
across the U.S. telecommunications and utilities industries,” said
QualTek’s Chief Executive Officer Scott Hisey. “The transactions
announced today will position our company to continue providing
best-in-class service to our customers, remain a dedicated employer
of our military veterans, and build on our industry-respected track
record. We are entering this process with the overwhelming support
of our lenders and customers, which we expect will enable us to
move through this process quickly and without disruption. With the
continued dedication of our employees and partners, we plan to
emerge stronger and ready to build for the future."
The RSA provides a better roadmap for QualTek to emerge swiftly
from Chapter 11 with a strong balance sheet and positioned to
invest in growth. Under the terms of the RSA, the Company
contemplates a $65 million debtor-in-possession term loan financing
facility (“DIP Facility”), which will include a new money funding
of $40 million. Upon approval by the Court, the DIP Facility will
provide the Company with the stability and liquidity needed to
continue operations in the ordinary course of business and pay
vendors during the reorganization. Management continues to lead the
business, roles and responsibilities across the team remain the
same, and operations across the Company are expected to continue as
usual.
Additional Information about the Financial Restructuring
QualTek is filing customary “First Day Motions” with the Court to
facilitate a smooth transition into Chapter 11. These motions,
which the Company expects to be approved in short order, include
requests to pay wages and benefits, pay trade vendors, and ensure
the continuation of business operations without interruption. The
Company will continue servicing its existing customers, vendors,
partners, and other stakeholders in the ordinary course of
business.
Additional information about the Company’s financial
restructuring is available on the website of its claims agent,
Epiq, at https://dm.epiq11.com/QualTek. With questions,
stakeholders can contact Epiq at (877) 609-4009 Toll Free or +1
(503) 447-4703 from outside the U.S. or Canada, or by emailing
QualTek@epiqglobal.com.
Advisors Kirkland & Ellis LLP and Jackson Walker LLP
are serving as legal counsel, Jefferies is serving as investment
banker, and Alvarez & Marsal is serving as financial advisor to
the Company. The Company has retained C Street Advisory Group to
serve as the strategy and communications advisor.
About QualTek Founded in 2012, QualTek is a leading
technology-driven provider of infrastructure services to the 5G
wireless, telecom, power grid modernization and renewable energy
sectors across North America. QualTek has a national footprint with
more than 65 operation centers across the U.S. and a workforce of
over 5,000 people. QualTek has established a nationwide operating
network to enable quick responses to customer demands as well as
proprietary technology infrastructure for advanced reporting and
invoicing. The Company reports within two operating segments:
Telecommunications, and Renewables and Recovery and has already
become a leader in providing disaster recovery logistics and
services for electric utilities. For more information, please visit
https://www.qualtekservices.com.
Forward Looking Statements This press release contains
forward‑looking statements for the purposes of the safe harbor
provisions under the United States Private Securities Litigation
Reform Act of 1995, including statements about the Company’s
ability to successfully consummate the Restructuring and emerge
from cases commenced under chapter 11 of the Bankruptcy Code, the
potential adverse effects of the Chapter 11 Cases on our liquidity,
and results of operations and the Company’s ability to obtain
confirmation of the Plan under the Chapter 11 Cases.
Forward-looking statements are typically identified by words such
as “plan,” “believe,” “expect,” “anticipate,” “intend,” “outlook,”
“estimate,” “forecast,” “project,” “continue,” “could,” “may,”
“might,” “possible,” “potential,” “predict,” “should,” “would,” and
other similar words and expressions (or the negative versions of
such words and expressions), but the absence of these words does
not mean that a statement is not forward-looking.
These forward looking statements are subject to risks,
uncertainties and other factors, many of which are outside of
QualTek's control, that could cause actual results or outcomes to
differ materially from the results or outcomes discussed in the
forward looking statements, including, without limitation,
statements regarding: the ability of QualTek to reach an agreement
with its lenders and noteholders on a recapitalization plan for
QualTek or the ability of QualTek to enter into a restructuring
support agreement with its lenders and noteholders; the effects of
any agreement or restructuring support agreement between QualTek
and its lenders and noteholders, including QualTek’s ability to
reduce its debt, strengthen its balance sheet and facilitate an
infusion of new capital; the effect of the bankruptcy process under
chapter 11 of the United States Bankruptcy Code (the “Chapter 11
process”) on the implementation of any restructuring transactions
pursuant to a restructuring support agreement (the “Restructuring
Transactions”) and the interests of various constituents, including
the holders of our ordinary shares; the length of time and the
ability to complete a financial restructuring (the
“Restructuring”), including a restructuring of our existing debt,
existing equity interests, and certain other obligations; QualTek’s
ability to continue as a going concern; the ability of QualTek to
continue to operate in the ordinary course of business while the
Restructuring and Chapter 11 process are pending and without
disruptions to relationships with suppliers, customers, employees
and other third parties and regulatory authorities; potential
adverse effects of the Restructuring and Chapter 11 process on
QualTek’s liquidity, results of operations or business prospectus;
the availability of sufficient liquidity or operating capital
during the pendency of the Chapter 11 process; QualTek’s expected
position and ability to improve long-term capital structure and
address its debt service obligations following the completion of
the Restructuring and Chapter 11 process; QualTek’s ability to
maintain the listing of its ordinary shares on the NASDAQ or
another stock exchange during or following the Chapter 11 process;
QualTek’s ability to obtain timely approval by the bankruptcy court
with respect to the motions filed in connection with the Chapter 11
process; the risks associated with third party motions during the
Chapter 11 process and objections to QualTek’s Restructuring or
other pleadings filed that could protract the Chapter 11 process or
prevent the consummation of the Restructuring Transactions or an
alternative Restructuring; the volatility in the price of our
ordinary shares, including as a result of the Restructuring
Transactions or the Chapter 11 process; increased administrative
and legal costs related to the Restructuring Transactions and the
Chapter 11 process; litigation and inherent risks involved in a
Restructuring or bankruptcy process our potential need to continue
to engage with shareholders and debtholders with respect to our
capital structure and the Restructuring Transactions; our potential
need to seek additional strategic alternatives, including by
raising additional equity capital or debt, by reducing or delaying
our business activities, by initiating reductions in force, by
selling assets, by Restructuring, refinancing, purchasing, repaying
or otherwise retiring our outstanding debt; our ability to remain
compliant with all covenants in our existing and new debt; employee
attrition and QualTek’s ability to retain senior management and
other key personnel due to the distractions and uncertainties in
connection with the Restructuring Transactions; QualTek’s ability
to comply with the restrictions imposed by the terms and conditions
of any new money financing arrangements; the volatile global
economic conditions and a downturn in the worldwide economy due to
inflation, geopolitics, changes in raw material and energy prices;
interruptions in raw materials and energy supply; economic and
other impacts from the military conflict in Ukraine and the
economic sanctions imposed due to the conflict; the impacts of
global health crises and the measures put in place by governments
in response; our ability to maintain sufficient working capital;
the costs associated with site closures; the execution, impact or
timing of our cost reduction programs and initiatives and risks
related to local law requirements in various jurisdictions;
industry production capacity and operating rates; the supply demand
balance for our products and that of competing products; pricing
pressures; technological developments; legal claims by or against
us; changes in government regulations; the impacts of increasing
climate change regulations; geopolitical events; cyberattacks; and
public health crises.
Any forward-looking statement speaks only as of the date on
which it is made, and, except as required by law, QualTek does not
undertake any obligation to update or revise any forward-looking
statement, whether as a result of new information, future events or
otherwise. New factors emerge from time to time, and it is not
possible for QualTek to predict all such factors. When considering
these forward-looking statements, you should keep in mind the risk
factors and other cautionary statements and uncertainties described
from time to time in the documents that QualTek files with the SEC,
including QualTek 's Annual Report on Form 10-K for the year ended
December 31, 2022. The risk factors and other factors noted therein
could cause results, outcomes, expectations, and projections to
differ materially from those contained in any forward-looking
statement.
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version on businesswire.com: https://www.businesswire.com/news/home/20230524005458/en/
Media & Investor Relations C Street Advisory Group
QualTek@thecstreet.com
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