Willbros amends term loan financial covenants to increase flexibility

By Tali Rackner

Norfolk, Va., March 1 – Willbros Group, Inc. amended the financial covenants associated with its term loan to put in place less stringent financial covenants for all of 2016 and the first two quarters of 2017, according to a press release.

This third amendment suspends compliance with the maximum total leverage ratio and the minimum interest coverage ratio covenants for an additional quarterly calculation period ending June 30, 2016. Under the first amendment, the covenant suspension period runs through the quarterly calculation period ending March 31, 2016. Any failure by the company to comply with such financial covenants during the covenant suspension period will not be deemed to result in a default or event of default under the term credit agreement, according to an 8-K filing with the Securities and Exchange Commission.

In addition, the maximum total leverage ratio decreases to 4.5 times as of Sept. 30, 2016 and Dec. 31, 2016, to 3.25 times as of March 31, 2017 and to 3 times as of June 30, 2017 and thereafter.

The minimum interest coverage ratio increases to 1.75 times as of Sept. 30, 2016 and Dec. 31, 2016, to 2.5 times as of March 31, 2017 and to 2.75 times as of June 30, 2017 and thereafter.

Finally, solely for the four quarter fiscal period ending Sept. 30, 2016, consolidated EBITDA shall be equal to the sum of consolidated EBITDA for the fiscal quarters ending June 30, 2016 and Sept. 30, 2016, multiplied by two.

Willbros paid an amendment fee of about $2.3 million in the first quarter of 2016.

Willbros elected to seek and has obtained this additional flexibility in its financial covenants given the uncertain general market conditions and the potential impact of sustained low oil and natural gas prices on customer spending.

The company has significantly reduced its debt and operating cost structure over the past 18 months and expects to report that its term loan debt at Dec. 31, 2015 is about $95 million, compared to $270 million at year-end 2014.

Willbros is a Houston-based specialty energy infrastructure contractor for the oil, gas, refining, petrochemical and power industries.

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