) 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).
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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
), J.P. Morgan Securities LLC - a wing of
JPMorgan Chase & Co.
) and U.S. Bank National Association were among the joint book
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.
) also belongs to the building and construction industry and
carries a Zacks Rank #2 (Buy).