JPMorgan Chase and Blackstone Credit provided recapitalization through a combination of financing facilities for Atlas Technical Consultants, a provider of professional testing, inspection, engineering, environmental and consulting services.
Blackstone Credit provided a new term loan credit agreement consisting of $432 million of long-term debt maturing in 2028 and a $75 million committed delayed draw term loan.
JPMorgan replaced the company’s existing revolving credit facility with a new, five-year, $40 million asset-based revolving credit agreement.
Atlas used a portion of net proceeds from the new debt to repay all of its $270 million of outstanding borrowings under its existing term loan, including by rolling nearly $62 million of its existing term loans into the new term loan facility, and to redeem in full its $154 million of outstanding Series A preferred equity units at a redemption price of par plus accrued and unpaid dividends.
“This milestone transaction represents the latest transformative step in our multi-year plan to streamline and optimize our capital structure to support our growth objectives through both organic expansion and deleveraging acquisitions. Through these immensely beneficial actions, we are eliminating our preferred equity, simplifying our debt structure, reducing borrowing costs and adding financial flexibility for accretive initiatives. We expect that this recapitalization and its projected savings, along with disciplined cash management, will continue to enhance the cash flow generated by our business and returns to our shareholders. We are extremely pleased to be partnering with two of the most respected lending partners in Blackstone and JPMorgan Chase and appreciate their confidence in our strategy and their deep commitment to supporting our business as we accelerate growth,” David D. Quinn, senior CFO of Atlas, said.
This transaction:
- Fully redeems Atlas’ outstanding preferred equity at par
- Replaces the existing debt and preferred equity structure with a single $432 million long-term loan, a $75 million committed delayed draw term loan and a $40 million asset-based revolver with an uncommitted $20 million expansion feature
- Lowers the overall aggregate interest rate on debt by nearly 100 basis points, including a 375-basis point reduction in the interest rate spread on the revolver to LIBOR plus 2.5% while eliminating the LIBOR floor
- Reduces amortization on long-term debt from the current 5% annually to 0% in year one, and 1% thereafter through the term of the loan, which has been extended by two years to 2028
- Decreases average annual cash outlays on overall debt service and dividends by an estimated $13 million in year one and $8 million thereafter
- Increases access to liquidity by approximately $116 million over the next two years to support new growth initiatives and M&A
- Positions Atlas to accelerate its target net leverage reductions through anticipated EBITDA growth by executing on the company’s organic growth and deleveraging M&A strategy in the coming years
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“We are proud to be a partner to Atlas and its management team. Since becoming public, Atlas has demonstrated the resilience of its business model. The company’s strong performance through the pandemic has further reinforced our conviction in Atlas’ growth strategy and solid footing to produce attractive returns.” Josh Lafer, principal of Blackstone, said.
“Through this transaction, we believe we are further optimizing the company’s capital structure for continued success. With over $500 million of committed capital from Blackstone, we believe Atlas is well positioned for growth as we see increased investments in transportation, infrastructure and environmental solutions across the U.S. over the coming years,” Brad Colman, senior managing director of Blackstone, said.
“This transaction builds on the significant strides we have taken to improve our capital structure since becoming a public company. We are expanding our liquidity and unlocking additional cash flow that puts us in an even stronger position to execute on our deleveraging M&A strategy as an acquirer of choice. This increased flexibility, coupled with our expanding backlog, better positions our business to grow and to outperform as our end markets continue to improve,” L. Joe Boyer, CEO of Atlas, said.
Thompson & Knight acted as legal counsel to Atlas, Willkie Farr & Gallagher acted as legal counsel to Blackstone and Vinson & Elkins acted as legal counsel to JPMorgan Chase.
Headquartered in Austin, TX, Atlas is a provider of professional testing, inspection, engineering, environmental, program management and consulting services.
