Team, Inc. Strengthens Financial Position with Preferred Stock Deal
Team, Inc. Successfully Closes Private Placement of Preferred Stock
Reduces Leverage and Provides Enhanced Financial Flexibility
Team, Inc. (NYSE: TISI), a prominent global provider of specialized industrial services, has made headlines with the successful closure of a private placement of preferred stock amounting to $75 million, along with warrants, to affiliates of Stellex Capital Management LLC. This significant transaction serves multiple purposes, including reducing debt and enhancing the Company's financial flexibility.
Key Highlights of the Transaction
The recent financial maneuver brings several benefits to Team, including:
Financial Strengthening
- Closure of $75 million in preferred stock sales;
- Approximately $67 million of existing debt paid;
- Amendments to Team’s ABL Credit Facility, increasing the commitment by $20 million and extending the maturity to October 2028;
- Improvements to the First Lien Term Loan Facility for increased financial flexibility;
- A potential delayed draw option allowing for an additional $30 million in preferred stock to be issued over the next 24 months.
Management’s Vision and Commitment
Keith D. Tucker, the CEO of Team, expressed his enthusiasm about the new partnership with Stellex, highlighting its importance in the context of the Company’s strategic roadmap aimed at simplifying operations and driving growth. He noted the significance of this investment in strengthening Team's balance sheet while also facilitating plans for ongoing transformation and cost management.
Future Growth Initiatives
As a part of the strategy, the collaboration with Stellex is expected to bolster operational improvement, advance technological capabilities, and create long-term value for all stakeholders involved, including Team’s dedicated workforce.
Understanding Team's Preferred Stock
The private placement entails the issuance of 10.5% Series B Preferred Stock, which comes with a quarterly dividend option, either in cash or through an increase in stated value. Alongside the preferred stock, Stellex also holds warrants that provide opportunities for future equity participation within Team.
Use of Proceeds
Team plans to utilize the net proceeds from the preferred stock offering mainly to pay down outstanding loans under its current credit facilities. Specifically, this includes a $25 million repayment to Eclipse Business Capital and about $42 million to Corre Partners Management, enhancing liquidity and allowing for further strategic adjustments.
Amendments to Financial Facilities
In conjunction with the preferred stock placement, Team announced significant amendments to its ABL and First Lien Credit Facilities. The enhancements include increased commitment amounts and adjusted margins, offering better terms and reducing borrowing costs.
Financial Advisors
Team received guidance from Houlihan Lokey and Kirkland & Ellis LLP during this transaction, ensuring a well-structured financial approach to meet current and future needs.
About Team, Inc.
Based in Sugar Land, Texas, Team, Inc. (NYSE: TISI) stands as a leading provider of specialized industrial services focused on offering a comprehensive suite of mechanical, heat-treating, and inspection services. The firm’s commitment to innovation and operational efficiency supports clients across various sectors, enhancing the reliability and safety of critical assets.
Commitment to Employees
Team values its workforce greatly and aims to create an environment that is both supportive and conducive to employee growth — a focal point echoed by Stellex Capital’s representatives during discussions surrounding the transaction.
Frequently Asked Questions
What is the significance of Team, Inc.'s recent preferred stock offering?
The preferred stock offering provides Team, Inc. with substantial capital to reduce debt and enhance its financial flexibility, facilitating strategic growth initiatives.
How will the funds from the preferred stock be utilized?
The proceeds will be primarily used to pay down existing loans, improving the overall financial structure of the company.
What benefits does the partnership with Stellex bring to Team?
The partnership with Stellex offers access to capital, strategic guidance, and a commitment to employee development, positioning Team for growth.
What changes were made to Team’s current financial facilities?
Team amended its ABL and First Lien Credit Facilities to increase commitment amounts and improve terms, reducing borrowing costs and extending maturities.
How does Team, Inc. support its employees?
Team is dedicated to fostering a supportive work culture that emphasizes employee development, ensuring it remains an employer of choice within the industry.
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