HC2 Holdings announced that its infrastructure business DBM Global (“DBM”) has completed its previously announced acquisition of a 100% interest in Banker Steel Holdco from Atlas Holdings. DBM also announced that it has entered into a new credit agreement that provides for a $110 million term loan and a $110 million revolving credit facility, which will be used to fully repay DBM’s existing debt obligations, fund a portion of the Banker Steel acquisition and provide additional working capital capacity.
The new Credit Agreement from a syndicate led by UMB Bank provides for senior secured debt of DBM in the total amount of $220 million, comprised of a $110 million term loan and a $110 million revolving credit facility. The revolving credit facility will mature on May 31, 2024 and will bear an initial interest of prime minus 1.10%. The term loan will mature on May 31, 2026 and will bear an interest rate of 3.25%. In addition to funding a portion of the Banker Steel acquisition, the term loan and revolving credit facility will be used to repay any and all outstanding amounts on DBM’s existing credit agreement with Wells Fargo Bank and DBM’s existing loan from TCW Asset Management Company. There is no prepayment premium. Any undrawn amounts under the revolving credit facility will be available for DBM’s general corporate purposes.
The purchase price for the acquisition of the Banker Steel family of companies was $145 million (subject to working capital and other customary post-closing adjustments), which was financed with $64.1 million from the proceeds of the new term loan/revolving credit facility, $49.6 million of sellers’ notes, $6.3 million of assumed debt of Banker Steel, and $25 million in cash received from HC2 in settlement of certain intercompany balances.
Banker Steel, which is now a wholly owned subsidiary of DBM, is based in Lynchburg, Virginia and provides fabricated structural steel and erection services primarily for the East Coast and Southeast commercial and industrial construction market. Banker Steel consists of six operating companies: Banker Steel Co., LLC; NYC Constructors, LLC; Memco LLC; Derr & Isbell Construction LLC; Innovative Detailing and Engineering Solutions; and Lynchburg Freight and Specialty LLC. Don Banker, CEO, and his executive team will continue their key roles with Banker Steel.
“We are thrilled to add an industry leader with a renowned track record and over $800 million of backlog at the end of April,” said Rustin Roach, CEO and Chairman of DBM. “Having overseen marquee projects including One Vanderbilt, the Jacob K. Javits Convention Center Expansion, JP Morgan’s headquarters and the Barclays Center, Banker’s leading presence on the East Coast is an ideal complement to DBM’s primarily West Coast focused footprint.”
“The addition of the Banker Steel family of companies to DBM, which is already the largest steel fabrication and erection company in the United States, provides DBM with an enhanced geographic diversity that will allow the company to take full advantage of a market that is poised for significant growth,” said Avie Glazer, Chairman of HC2.
“With an expected return to pre-pandemic activity levels throughout the rest of 2021 and into 2022, coupled with government spending on infrastructure projected to be in the trillions of dollars over the next decade, HC2 anticipates that this transaction will help drive long-term revenue growth in our infrastructure segment,” added Wayne Barr, Jr., Chief Executive Officer of HC2.
“Our more favorable new Credit Agreement significantly reduces DBM’s cost of capital and will provide us with the continued liquidity and flexibility to operate efficiently,” noted Mike Hill, CFO of DBM.