Willbros Group Completes Acquisition of InfrastruX Group, Inc. and Enters Into New Credit Facility

Wednesday, Jul 07, 2010

Willbros Group, Inc. /quotes/comstock/13*!wg/quotes/nls/wg (WG 7.35, -0.16, -2.13%) today announced that it has completed the acquisition of privately held InfrastruX Group, Inc., a leading national provider of electric power and natural gas transmission and distribution infrastructure services. Concurrently, the Company closed on a new credit facility consisting of a $300 million term loan and a $175 million revolving credit facility. The Company noted that the revolving credit facility remains undrawn and provides, in conjunction with the Company's substantial cash position, strong liquidity going forward.

The InfrastruX acquisition expands Willbros' presence and service offerings in North America. The combination now includes engineering and construction services for the electric power transmission and distribution (T&D) markets in addition to greater exposure to natural gas infrastructure build-out and shale play developments.

Under the agreement, Willbros paid approximately $360 million in cash, a portion of which was used to retire InfrastruX indebtedness and pay InfrastruX transaction expenses, and issued approximately 7.9 million new Willbros shares. The number of shares was fixed on March 11, 2010. In addition, the former shareholders of InfrastruX will be eligible for contingent earn-out payments of up to $125 million in the aggregate. Those earn-out payments begin as EBITDA for the InfrastruX business exceeds $69.8 million in 2010 and $80.0 million in 2011.

"We are pleased to consummate this transaction and welcome InfrastruX to the Willbros group of companies. This combination gives Willbros a leadership position in the burgeoning markets for electricity transmission and distribution services and we are enthusiastic about the opportunities it affords us as we execute our strategy to diversify our service offering into new geographies and end markets that draw on our core competencies in project management, engineering, construction and maintenance. The acquisition also adds to our scale at a time customers are seeking partners with greater financial strength, broader operational capabilities and wider geographic footprints," said Randy Harl, Willbros President and Chief Executive Officer.

Management indicated that it would update the expected 2010 results at its next scheduled earnings call in early August. This update is expected to include pre-tax costs associated with the transaction and amortization of intangible assets acquired.

The combination will position Willbros as a leader in three diverse end markets for engineering, construction, maintenance and life-cycle extension services: hydrocarbon infrastructure, including natural gas pipelines; refining and processing plants; and the North American electric power transmission and distribution market, which is forecasted to attract in excess of $56 billion in capital investment over the next 12 years. Willbros management recognizes an opportunity to participate in major electric transmission projects, much like the natural gas pipeline infrastructure build-out Willbros has successfully participated in, since 2007, in the United States.

InfrastruX will operate as a separate segment of Willbros. This will reduce the integration risk and keep intact the InfrastruX management team, which will continue in the new Utility Transmission & Distribution Segment, led by President Michael Lennon.

Significant cross-selling opportunities are expected to arise from the companies' complementary client and service bases. InfrastruX provides natural gas infrastructure services that focus on gathering and transmission systems which complement Willbros' business in large-diameter pipelines and enable the Company to offer its customers a more integrated solution to pipeline infrastructure needs. InfrastruX has a significant presence in geographic areas Willbros has targeted for growth, such as the Marcellus shale region, where Willbros is expanding its engineering presence and providing services to a major alliance partner.

Mr. Harl added, "The natural gas component of InfrastruX is a bonus to our strategy to diversify our services into the electric T&D market. As we move into the integration phase, management's focus will be on optimizing the combination to maximize shareholder value."

Willbros financed the transaction with a combination of new common stock and cash. The cash consideration was provided from existing cash on the Willbros balance sheet and a $300 million, four-year term loan. The new credit facility includes a three year $175 million revolving credit facility, undrawn at closing. The four year term loan bears an interest rate of LIBOR, with a 2 percent floor, plus 7.5 percent, and was effected at a 6 percent Original Issue Discount.

Goldman, Sachs & Co. is acting as Willbros' financial advisor. Conner & Winters, LLP is serving as Willbros' legal advisor. Financial advisors for InfrastruX were UBS Securities LLC and Credit Suisse Securities (USA) LLC. Latham & Watkins LLP is serving as InfrastruX' legal advisor.

Conference Call Willbros will provide additional color on the transaction on its second quarter earnings call, which will be scheduled and announced in mid-July.

About InfrastruX Group, Inc. InfrastruX Group, Inc. is a national provider of transmission and distribution maintenance and construction solutions since 2000, providing services from regional centers in the U.S. South Central, Midwest and East Coast, with a skilled workforce of over 4,400 employees. For more information on InfrastruX, visit www.infrastrux.com.

About Willbros Group, Inc. Willbros Group, Inc. is an independent contractor serving the oil, gas, power, refining and petrochemical industries, providing engineering, construction, turnaround, maintenance, life cycle extension services and facilities development and operations services to industry and government entities worldwide. For more information on Willbros, please visit our web site at www.willbros.com.

 

Source: MarketWatch