U.S. Markets closed

Furmanite buys ENGlobal's Gulf Coast operations

HOUSTON (AP) -- Specialty industrial services company Furmanite is buying ENGlobal Corp.'s Gulf Coast operations in a deal valued at about $21.5 million, as it looks to broaden the services it offers customers.

ENGlobal said that the transaction — which consists of about half of its business — includes mostly cash due at closing, as well as a $3.5 million promissory note issued with a parent company guarantee.

In October ENGlobal announced that it was considering its strategic options. These alternatives included the potential sale of the entire company as well as the sale of some of its assets.

Furmanite Corp. said Tuesday that the deal struck by its subsidiary Furmanite America Inc. includes ENGlobal's in-plant operations in the Gulf Coast area, along with the offices that support those operations. The offices are located in Beaumont, Deer Park and Freeport, Texas; Baton Rouge and Lake Charles, La. They also provide specialty technical services related to the development, management and execution of projects.

ENGlobal's customers include refining/petrochemical operators and maintenance and engineering and construction contractors that serve the oil and gas markets. The company said that it will keep its engineering operations and all of its automation operations in Houston, Tulsa, Okla.; Mobile, Ala.; Denver and Chicago.

ENGlobal said it will use the deal's net proceeds to pay back outstanding debt. Chairman and CEO William Coskey said in a statement that the company's turnaround plan — combined with the acquisition — will help to lower its debt and vendor obligations by about $50 million.

Approximately 900 full-time ENGlobal workers affected by the acquisition will join Furmanite's technical solutions unit. The management team will also transfer to Furmanite. EnGlobal will have 500 employees remaining.

Both companies' boards approved the deal, which is expected to close within 60 days.

ENGlobal, which since October has also shuttered its electrical services division and sold off its inspection divisions, said that it expects the deal with Furmanite to bring to a close its review of strategic options for the company.

Furmanite shares closed Monday at $7.81, up about 45 percent since the beginning of 2013. ENGlobal shares closed Monday at $1.34, and have more than doubled since the start of the year.