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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 8,
2022
CHARAH SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)
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Delaware
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001-38523
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82-4228671
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(State or other jurisdiction of incorporation)
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(Commission File Number)
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(IRS Employer Identification No.)
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12601 Plantside Drive
Louisville, Kentucky
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40299
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(Address of principal executive offices)
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(Zip Code)
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(Registrant’s telephone number, including area code): (502)
245-1353
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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Securities registered pursuant to Section 12(b) of the Act:
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Title of each
class
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Trading
symbol(s)
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Name of each exchange on
which registered
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Common Stock, par value $0.01 per share
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CHRA
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New York Stock Exchange
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8.50% Senior Notes due 2026
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CHRB
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New York Stock Exchange
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Indicate by check mark whether the registrant is an emerging growth
company as defined in Rule 405 of the Securities Act of 1933
(§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange
Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
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Item 5.02
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Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of
Certain Officers.
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Resignation and
Appointment of Chief Financial Officer and Treasurer
Appointment of Chief Executive Officer and President
On November 14, 2022, the Company announced that the Board of
Directors (the “Board”) of the Company appointed Jonathan Batarseh,
age 47, as Chief Executive Officer and President of the Company,
effective immediately after the filing of the Company’s third
quarter 2022 Form 10-Q (the “Start Date”). The appointment is in
conjunction with the announcement that Scott Sewell has resigned as
the Company’s President and Chief Executive Officer and as a member
of the Company’s Board, effective as of the filing of the Company’s
third quarter 2022 Form 10-Q. Mr. Sewell’s resignation was not the
result of any disagreement with the Company on any matter relating
to the Company’s financials, operations, policies, or practices. In
addition, on November 14, 2022, the Board appointed Mr. Batarseh to
serve as a member of the Board effective on November 15,
2022.
Mr. Batarseh is a licensed Certified Public Accountant (CPA) with
more than 20 years of corporate finance and accounting experience
in the engineering and construction industries. He joins the
Company from Brown & Root Industrial Services, a partnership
between KBR (NYSE: KBR) and Bernhard Capital Partners (BCP)
providing engineering, procurement, and construction services,
where he was CFO for six years, responsible for overseeing all
financial management and reporting, treasury, and information
technology and services, and where he also served as Vice President
in the finance organization of KBR for two years. Previously, Mr.
Batarseh served in senior financial leadership roles in various
industrial service companies including The Shaw Group, four years,
and Atkins, one year, following 10 years at KPMG serving clients in
the manufacturing and industrial sectors. Mr. Batarseh received his
Bachelor of Science degree in accounting from Louisiana State
University and is a member of the Society of Louisiana CPAs and the
Tax Executives Institute.
There are no arrangements or understandings between Mr. Batarseh
and any other persons, pursuant to which he was appointed to the
offices described above and no family relationships among any of
the Company’s directors or executive officers and Mr. Batarseh.
Additionally, Mr. Batarseh does not have any direct or indirect
interest in any transaction that would require disclosure pursuant
to Item 404(a) of Regulation S-K.
Appointment of Chief Financial Officer and Treasurer
On November 14, 2022, the Company announced that the Board
appointed Joe Skidmore, age 37, as Chief Financial Officer and
Treasurer of the Company, effective on the Start Date. Also,
effective as of the Start Date, Mr. Skidmore will serve as the
Principal Financial Officer and Principal Accounting Officer of the
Company. In connection with his appointment, the Company will enter
into its standard indemnification agreement with Mr. Skidmore, the
form of which was filed as Exhibit 10.1 to the Company’s
Registration Statement on Form S-1 filed with the Securities and
Exchange Commission on May 18, 2018.
Mr. Skidmore is a licensed Certified Public Accountant (CPA). Mr.
Skidmore joined the Company in 2018. Having been promoted with
increasing responsibility, he served as Corporate Controller for
the past two years. Prior to joining the Company, Mr. Skidmore
worked at KPMG in audit for close to a decade. He began his career
in tax with positions at Yum! Brands and Jones, Nale &
Mattingly. Mr. Skidmore earned his Bachelor of Science degree in
accounting and finance from University of Louisville.
There are no arrangements or understandings between Mr. Skidmore
and any other persons, pursuant to which he was appointed to the
offices described above and no family relationships among any of
the Company’s directors or executive officers and Mr. Skidmore.
Additionally, Mr. Skidmore does not have any direct or indirect
interest in any transaction that would require disclosure pursuant
to Item 404(a) of Regulation S-K.
Appointment of Executive Chairman of the Board and Additional
Directors
On November 14, 2022, the Board approved an increase in the size of
the Board from nine to ten members effective November 15,
2022.
On November 14, 2022, the Board appointed Robert “Bob” Decensi to
the Board as a Class I director and as Executive Chairman of the
Board, replacing Jack Blossman, Jr., effective on November 15,
2022, with a term expiring at the Company’s 2025 Annual Meeting of
Stockholders. Mr. Decensi was recently the CEO and Board member of
BHI Energy, a utility service company that provides engineering,
construction, and maintenance to the power generation and power
delivery markets. Prior joining BHI Energy, Mr. Decensi spent 18
years in the utility power generation and power delivery business
filling positions in both middle and senior level management. He
has worked for several of the largest U.S. blue-chip utilities,
including Northeast Utilities, Dominion Energy, Connecticut Light
& Power, and Entergy. During his utility tenure, he was part of
two major power plant recovery efforts with Northeast Utilities and
Entergy. Mr. Decensi served on the Board of Directors for NEI
(Nuclear Energy Institute) and has served in several capacities
supporting the Institute of Nuclear Power Operations (INPO). He is
a graduate of Millersville University of Pennsylvania and attended
the University of New Haven Executive MBA Program. Mr. Decensi was
nominated to the Board by Bernhard Capital Partners Management LP
(“BCP”) pursuant to its rights under the Series B Preferred Stock
Purchase Agreement dated as of November 14, 2022, by and among the
Company and Charah Preferred Stock Aggregator, LP. Additionally,
there are no transactions involving the Company and Mr. Decensi
that the Company would be required to report pursuant to Item
404(a) of Regulation S-K.
In connection with his election, Mr. Decensi will be compensated in
accordance with the Company’s standard compensation arrangements
for the Chairman of the Board. In connection with his appointment,
the Company will enter into its standard indemnification agreement
with Mr. Decensi, the form of which was filed as Exhibit 10.1 to
the Company’s Registration Statement on Form S-1 filed with the
Securities and Exchange Commission on May 18, 2018. In addition to
his compensation as Chairman of the Board and connection with his
services as Executive Chairman, the Company expects to enter into a
compensation agreement with Mr. Decensi. The terms of the
compensation agreement are currently being finalized and will be
included in a subsequent Current Report on Form 8-K.
On November 14, 2022, L.W. “Bill” Varner, upon the nomination of B.
Riley as the B. Riley Nominee under its Investor Rights Agreement,
was appointed to the Board, effective on November 14, 2022, as a
Class I Director with a term expiring at the Company’s 2025 Annual
Meeting of Stockholders. Mr. Varner was most recently the CEO and
Board member of Select Interior Concepts, a premier installer and
nationwide distributor of interior products, leading the company
from June 2020 to October 2021 and successfully taking the public
company private with a divestiture to Sun Capital Partners.
Previously, Mr. Verner was CEO of United Subcontractors, Inc.
(USI), the third largest insulation services provider in the United
States, from July 2012 to May 2018. During his tenure, he led a
transformation of the business through organic growth and strategic
M&A that resulted in USI achieving double digit EBITDA margins
and an eventual sale of the business, creating significant value
for shareholders. From 2004 to 2012, Mr. Varner served as President
and CEO of Aquilex Corporation, a leading provider of specialty
services to the energy sector. Under his leadership, the company
grew revenues by fivefold and achieved record earnings. Prior to
joining Aquilex in 2004, Mr. Varner served as President for several
global businesses in various equipment/component manufacturing and
service industries, orchestrating their growth in new markets
through expansion of service and product offerings. He is a
graduate of The Citadel in Charleston, South Carolina, and has
served on various philanthropic, industry, and community boards.
Currently, Mr. Varner serves on the board of directors for Acousti
Engineering, Strada Services, and Outdoor Living Supply.
In connection with his appointment, Mr. Varner will be compensated
in accordance with the Company’s standard compensation arrangements
for non-employee directors. There are no other related party
transactions between the Company and Mr. Varner that would require
disclosure under Item 404(a) of Regulation S-K. In connection with
his appointment, the Company will enter into its standard
indemnification agreement with Mr. Varner, the form of which was
filed as Exhibit 10.1 to the Company’s Registration Statement on
Form S-1 filed with the Securities and Exchange Commission on May
18, 2018.
In connection with Mr. Sewell’s departure from the Company, the
Company entered into a Separation Agreement and General Release of
Claims (the “Separation Agreement”) with Mr. Sewell. Under the
Separation Agreement, Mr. Sewell will (1) be paid a Severance
Payment amount of $1,120,000, representing 24 months of annual base
salary which will be paid out over 24 months, (2) a lump sum
Additional Severance Payment of $560,000 to be paid out on the date
of the first regular payroll payment date after the second
anniversary of the Separation Date, (3) pro-rata vesting of his
then-outstanding restricted stock units, and (4) pro-rata vesting
of this then-outstanding performance stock units. The Severance
Payment and Additional Severance Payment are subject to tax
withholding requirements. Mr. Sewell will also be eligible to
receive reimbursement from the Company of monthly premium amounts
for COBRA premiums for 18 months following the Separation
Date.
The foregoing summary of the material terms of the Separation
Agreement is subject to the complete provisions set forth in the
Separation Agreement, a copy of which is filed with this report as
Exhibit 10.1 and incorporated herein by reference.
On November 14, 2022, the Company issued a press release announcing
the above discussed issues. That press release is attached to this
report as Exhibit 99.1.
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Item 2.03.
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Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
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As previously disclosed, the Company entered into the Term Loan
Agreement (the “Term Loan Agreement”) by and among Gibbons Creek
Environmental Redevelopment Group, LLC, a Texas limited liability
company (the “Term Loan Borrower”), as borrower, the Company and
Charah, LLC, a Kentucky limited liability company (“Charah, LLC”),
as guarantors, and Charah Preferred Stock Aggregator, LP, a
Delaware limited partnership, as lender. The Term Loan Agreement
provides for a delayed-draw term loan in an aggregate principal
amount of $20.0 million. Borrowings under the Term Loan Agreement
accrue interest at a percentage per annum equal to 12.0%, with
interest payments due on the first business day of each calendar
quarter following the effective date of the Term Loan Agreement,
and on the maturity date.
On November 8, 2022, the Company elected to draw down $4.0 million
of the Term Loan Agreement to fund operating activities.
Immediately following this drawdown, $20.0 million of aggregate
loans were outstanding and no borrowing capacity remained available
under the Term Loan Agreement, representing the Company’s total
borrowing capacity under all current long-term financing
arrangements at that time. Prior to the drawdown, on October 28,
2022, the parties Amended the Term Loan Agreement to extend the
availability date until November 15, 2022.
The foregoing description of the Term Loan Agreement is qualified
in its entirety by reference to the full text of such agreement
which was filed as Exhibit 10.1 to the Current Report on Form 8-K
filed by the Company on August 15, 2022. The foregoing summary of
the material terms of the Amendment No. 1 to the Term Loan
Agreement (“Amendment”) is subject to the complete provisions set
forth in the Amendment, a copy of which is filed with this report
as Exhibit 10.2 and incorporated herein by reference.
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Item
9.01.
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Financial
Statement and Exhibits.
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Exhibit
Number
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Description
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Separation Agreement and General Release of Claims, dated November
14, 2022
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Amendment No. 1 to the Term Loan Agreement, dated October 28,
2022
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Press Release, dated November 14, 2022
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104
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Cover Page Interactive Data File (embedded within the Inline XBRL
document)
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
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CHARAH SOLUTIONS, INC.
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Date:
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November 15, 2022
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By:
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/s/ Steven A. Brehm
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Name:
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Steven A. Brehm
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