DBM Global, the infrastructure business of HC2 Holdings, completed its previously announced acquisition of a 100% interest in Banker Steel Holdco from Atlas Holdings. DBM also 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 its existing debt obligations, fund a portion of the Banker Steel acquisition and provide additional working capital capacity.
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, VA, and provides fabricated structural steel and erection services primarily for the East Coast and Southeast commercial and industrial construction markets. Banker Steel consists of six operating companies: Banker Steel, NYC Constructors, Memco, Derr & Isbell Construction, Innovative Detailing and Engineering Solutions and Lynchburg Freight and Specialty. Don Banker, CEO, and his executive team will continue their 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,” Rustin Roach, CEO and chairman of DBM, said. “Having overseen marquee projects including One Vanderbilt, the Jacob K. Javits Convention Center Expansion, JPMorgan’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,” Avie Glazer, chairman of HC2, said.
“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,” Wayne Barr Jr., CEO of HC2, said.
The new credit agreement being used to help fund the acquisition is from a syndicate led by UMB Bank. The revolving credit facility will mature on May 31, 2024, and will bear an initial interest of prime minus 1.1%. 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, DBM will use the term loan and revolving credit facility to repay any and all outstanding amounts on its existing credit agreement with Wells Fargo Bank and its 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.
“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,” Mike Hill, CFO of DBM, said.