Business Context and Reporting Period
Company: Babcock & Wilcox Enterprises, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: March 19, 2019
Event: Entry into a Material Definitive Agreement involving an amendment and limited waiver to the Company's existing Credit Agreement with Bank of America, N.A., and other lenders.
Key Financial Metrics and Liquidity
This filing does not report standard periodic financial metrics such as revenue, profit, or cash flow. The primary financial data points relate to the amended credit facility:
- Additional Commitments: $10.0 million in additional commitments from B. Riley Financial, Inc. under a second tranche of last out term loans.
- Borrowing Status: The $10.0 million tranche has been fully borrowed.
- Liquidity Covenant Adjustment: The minimum liquidity requirement for borrowing was temporarily reduced from $40.0 million to $35.0 million.
- Waived Covenants: Waivers were granted for consolidated interest coverage ratios, senior leverage coverage ratios, and specific contract completion milestones for a renewable energy project.
Material Changes and Agreements
The Company executed an Amendment and Limited Waiver on March 19, 2019, which replaced and extended waivers previously obtained on March 15, 2019. Key changes include:
- Debt Structure: Addition of a $10.0 million last out term loan tranche with terms (interest rate, maturity, prepayment) consistent with existing last out term loans.
- Covenant Relief: Temporary relief from maintaining specific financial ratios and project milestones, as well as waivers regarding net losses in renewable energy projects and the requirement for a going concern certification by auditors.
- Default Waivers: Waivers of certain events of default related to development projects in the Renewables segment.
- Expiration: The Amendment and Limited Waiver is set to terminate on March 29, 2019, unless earlier terminated by an event of default, failure to maintain the $35.0 million liquidity minimum, or payment of specific fees.
Outlook, Risks, and Related Parties
Related Party Transactions: B. Riley Financial, Inc., a significant stockholder owning more than 6% of the Company's outstanding common stock, provided the additional $10.0 million commitment. The Company and B. Riley are also party to a consulting agreement. Lenders may perform various financial services for the Company for customary fees.
Risks and Contingencies: The filing highlights liquidity constraints, evidenced by the need to reduce the minimum liquidity threshold and waive financial covenants. The temporary nature of the waiver (ending March 29, 2019) suggests ongoing uncertainty regarding the Company's ability to meet standard credit requirements without further amendments.
Investor Verification Checklist
- Verify the Company's actual liquidity position as of March 19, 2019, to confirm compliance with the reduced $35.0 million threshold.
- Monitor the status of the Amendment and Limited Waiver prior to its March 29, 2019 expiration date to determine if further extensions or defaults occur.
- Review the specific renewable energy projects mentioned to assess the impact of waived milestones and net loss limits on future operations.
- Confirm the terms of the consulting agreement between the Company and B. Riley Financial, Inc.