Business Context and Reporting Period
Company: KBR, INC.
Filing Type: Form 8-K (Current Report)
Date of Report: August 12, 2016
Event: Entry into a Material Definitive Agreement to acquire Honeywell Technology Solutions Inc. (HTSI).
Key Financial Metrics
Transaction Value: $300 million (subject to working capital and other purchase price adjustments).
Funding Source: Anticipated to be funded from funds available under the Company's Amended and Restated Revolving Credit Agreement dated September 25, 2015.
Financial Performance: The filing text does not provide specific revenue, profit, cash flow, margin, debt, or liquidity figures for the reporting period.
Material Changes
The primary material change is the agreement to acquire HTSI, a Delaware corporation providing technical, professional, and mission support services. Services include military pre-positioning operations, total package fielding, automated fuel handling, ground-based space mission services, and physical and cyber security. KBR, Inc. has entered into a Guaranty Agreement to guarantee the obligations of its subsidiary, KBR Holdings, LLC, under the Purchase Agreement.
Guidance, Outlook, and Risks
- Closing Conditions: The acquisition is conditioned upon clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and other usual and customary closing conditions.
- Termination Rights: Either party may terminate the agreement if the closing has not occurred prior to the 120th day after the date of the Purchase Agreement.
- Operational Restrictions: The agreement limits HTSI's activities outside the usual course of business pending completion, including restrictions on employee compensation, asset acquisitions/dispositions, and solicitations of alternative proposals.
- Disclaimer: Representations and warranties in the Purchase Agreement are not intended as statements of fact for investors and may not reflect the actual state of affairs at any given date.
Investor Verification Checklist
- Verify the final purchase price after working capital and other adjustments.
- Confirm receipt of Hart-Scott-Rodino Antitrust clearance.
- Monitor the 120-day deadline for closing to assess termination risk.
- Review the impact of the $300 million expenditure on the Company's Revolving Credit Agreement capacity.
- Examine the full text of the Purchase Agreement (Exhibit 2.1) for omitted schedules and detailed covenants.