Global Power Equipment Group Inc. Files Voluntary Chapter 11 Reorganization
September 28 2006 - 8:22PM
PR Newswire (US)
TULSA, Okla., Sept. 28 /PRNewswire-FirstCall/ -- Global Power
Equipment Group Inc. (NYSE:GEG) announced that after close of
business today, it and all of its U.S. subsidiaries, including
Williams Industrial Services Group, L.L.C., Braden Manufacturing,
L.L.C. and Deltak, L.L.C., commenced Chapter 11 cases in Delaware
bankruptcy court to reorganize their financial affairs and address
the ongoing cash drain from Deltak's Heat Recovery Steam Generator
(HRSG) business. The Company believes that the Williams and Braden
businesses are fundamentally sound and intends to continue to
operate those businesses without interruption. The Company
anticipates obtaining Court authority by Monday, October 2, to
access over $20 million of cash on hand as needed to ensure that
Williams' and Braden's ongoing operations are adequately funded.
Braden will also seek limited accommodations from its customers to
ensure completion of all current projects. Deltak, which notified
its employees of a substantial initial reduction in its workforce
prior to the filing, will begin an orderly wind down of its HRSG
business, unless it is able to obtain material concessions from its
customers regarding the terms on which it would complete its major
ongoing projects. Deltak's Specialty Boiler business will continue
operations, subject to obtaining immediate accommodations from
certain of its customers. The Company's foreign subsidiaries in
Asia, Europe and Mexico are not included in the Chapter 11 filings.
Their businesses will continue as usual without oversight by the
U.S. Bankruptcy Court. "We have been actively exploring options to
recapitalize our businesses for the last nine months," said Larry
Edwards, the Company's President and Chief Executive Officer.
"Ultimately, this effort led us to the difficult conclusion that
Chapter 11 would provide the best opportunity to maximize value for
all of our stakeholders." The Company has experienced escalating
losses related to large scale HRSG projects within Deltak. These
losses, coupled with Global Power's inability to access its credit
facility, have resulted in the Company's liquidity recently
becoming significantly constrained. As a result, the Board of
Directors concluded, after consultation with its advisors, that the
interests of the Company's stakeholders would be best served by
reorganizing under Chapter 11 of the U.S. Bankruptcy Code. Global
Power said it has initiated a thorough evaluation of all aspects of
its business operations and is undertaking a full review of its
strategic alternatives to maximize value for all its stakeholders.
The Company anticipates additional workforce reductions in its
subsidiaries, excluding Williams, as part of the reorganization.
The Company expects to obtain Court approval to continue to pay its
remaining employees all regular compensation and health and other
benefits in the future. "The Board of Directors, the senior
management team and I greatly appreciate the continued loyalty and
support of our employees," said Edwards. Global Power noted that
there is no assurance as to what value, if any, will be ascribed in
the Chapter 11 cases to Global Power's existing common stock.
Accordingly, the Company urges that the appropriate caution be
exercised with respect to existing and future investments in the
stock as the value and prospects are highly speculative. Global
Power's legal advisor in the Chapter 11 filing is White & Case
LLP. Alvarez & Marsal is providing the Company with financial
advisory services. More information about Global Power's
reorganization is available on the Company's website at
http://www.globalpower.com/ or by telephone as follows: Investors
and Media: (918) 274-2357; Suppliers and Customers: (800) 419-3922
or for callers outside the United States and after business hours,
(972) 535-7128. Completion of Jones Day Review Separately, as
previously announced, the Audit Committee of the Board of Directors
engaged Jones Day, an international law firm, to conduct a review
of cost reporting practices within Deltak's HRSG business. Jones
Day reported its findings to the Audit Committee and to the
Company's external auditors, PricewaterhouseCoopers LLP. Although
Jones Day highlighted certain control deficiencies with the cost
reporting processes and systems, there was no conclusion of fraud
or any pattern of wrongdoing identified. Officer Resignation
Separately, the Company announced that Mardi de Verges, Senior Vice
President and CFO-Elect resigned effective September 18, 2006.
About Global Power Equipment Group Oklahoma based Global Power
Equipment Group Inc. is a leading design, engineering and
manufacturing firm providing a broad array of equipment and
services to the global energy, power infrastructure and process
industries. The Company designs, engineers and manufactures a
comprehensive portfolio of equipment for gas turbine power plants
and power-related equipment for industrial operations, and has over
30 years of power generation industry experience. The Company's
equipment is installed in power plants and industrial operations in
more than 40 countries on six continents. In addition, the Company
provides routine and specialty maintenance services to nuclear,
coal-fired, fossil, and hydroelectric power plants and other
industrial operations. Additional information about Global Power
Equipment Group may be found at http://www.globalpower.com/ .
Statements contained in this release regarding the Company's or
management's intentions, beliefs, expectations, or predictions for
the future, including, but not limited to, those regarding
anticipated operations and operating results, are forward-looking
statements within the meaning of U.S. federal securities laws and
are subject to a number of risks, assumptions and uncertainties
that could cause the Company's actual results to differ materially
from those projected, including, but not limited to, the audit of
the Company's restated financial statements and the completion and
audit of the Company's 2005 financial statements; the ability of
the Company to continue as a going concern; the ability of the
Company to operate pursuant to the terms of any
debtor-in-possession financing facility that may be put in place;
the ability of the Company to obtain and maintain normal terms with
vendors, suppliers and service providers; the Company's ability to
maintain contracts that are critical to its operations; the
potential adverse impact of the Chapter 11 case on the Company's
liquidity or results of operations; the ability of the Company to
fund and execute its business plan; the ability of the Company to
attract, motivate and/or retain key executives and managers and
employees; the ability of the Company to attract and retain
customers; the Company's ability to obtain court approval with
respect to motions in the Chapter 11 proceeding prosecuted by it
from time to time; risks associated with third parties seeking and
obtaining court approval to terminate or shorten the exclusivity
period for the Company to propose and confirm one or more plans of
reorganization, for the appointment of a Chapter 11 trustee or to
convert the cases to Chapter 7 cases; and the ability of the
Company to develop, prosecute, confirm and consummate one or more
plans of reorganization with respect to the Chapter 11 case. Some
of the other factors that could cause actual results to differ
materially from those in, or implied by, the forward looking
statements are set forth under "Risk Factors" in the Company's Form
10-K for the period ended December 31, 2004, and other reports on
file with the U.S. Securities and Exchange Commission. The Company
assumes no obligation to update publicly such forward-looking
statements, whether as a result of new information, future events
or otherwise. DATASOURCE: Global Power Equipment Group Inc.
CONTACT: Investors and Media, +1-918-274-2357 Web site:
http://www.globalpower.com/
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