Aegion Corporation (AEGN) has announced the completion of its acquisition of Brinderson, L.P. for $150 million. The acquisition will provide Aegion an opportunity to generate sustainable growth, increase cash flows and improve return on invested capital (ROIC).
Brinderson acquisition is in line with Aegion’s strategic efforts to enhance its presence in the U.S. energy market. The acquisition has been funded by Aegion’s new senior secured credit facility worth $650 million as stated earlier.
Headquartered in Costa Mesa, Calif., Brinderson is a leading integrated service provider of maintenance, construction, engineering and turnaround activities for the upstream and downstream oil and gas markets. The acquisition will help Brinderson to enter new markets and support the continued growth in its West Coast market.
Aegion, however, will benefit from the combined strength of Brinderson’s safety records, strong reputation and comprehensive solutions. Aegion, with the help of Brinderson’s long-term association with large and blue chip companies, will get access to the upstream and downstream markets.
Aegion derived around 45% of its total revenues from recurring activities of its Energy & Mining platform. The acquisition will add 5% more revenues to the Energy & Mining segment. Brinderson acquisition will also help to preserve and rehabilitate vital pipeline assets of the company.
In addition, Aegion’s new credit facility includes a $300 million five-year revolving line of credit and a $350 million five-year term loan facility, which replaces the previous credit facility of $500 million. The company has utilized $385.5 million from the new facility to finance the transaction, repay the outstanding debt under prior credit facility and fund expenses.
Interest will be charged on new credit facility at the LIBOR rate plus an applicable rate ranging from 1.25% to 2.25%, depending on the company’s consolidated leverage ratio. Aegion, however, has the option to pay an interest as per the credit documents plus an applicable rate, based on its consolidated leverage ratio. The credit facility also includes a provision to either increase the revolving credit line or the term loan with additional commitments of up to $250 million.
Bank of America, N.A. served as the administrative agent of the offering. Merrill Lynch Pierce Fenner & Smith Incorporated – a subsidiary of Bank of America Corporation (BAC), J.P. Morgan Securities LLC – a wing of JPMorgan Chase & Co. (JPM) and U.S. Bank National Association were among the joint book running managers.
Chesterfield, Mo.-based Aegion is a diversified building and construction company which provides infrastructure protection, proprietary technologies and services. It also offers services related to the rehabilitation and improvement of sewer, water, energy and mining piping systems.
Aegion currently holds a Zacks Rank #3 (Hold). Armstrong World Industries, Inc. (AWI) also belongs to the building and construction industry and carries a Zacks Rank #2 (Buy).
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