Encompass Services Corp. has secured debtor-in-possession (DIP) financing and additional bonding capacity to use during its reorganization process, according to a recent article in the Houston Business Chronicle.
The Houston-based Encompass said it inked a deal with a syndicate of financial institutions including Bank of America, JPMorgan Chase Bank and General Electric Capital Corp. for a $60 million DIP financing commitment. Encompass said the funds will provide it with adequate liquidity during its Chapter 11 bankruptcy process. The provider of electrical and mechanical services filed for bankruptcy protection on Nov. 19.
The DIP financing will be used for employee salaries and benefits, vendor payments and other ongoing working capital needs. The company also stated that it has reached agreements with its two primary surety bond providers, Chubb and Son, a division of Federated Insurance Co., and Liberty Bond Services, regarding access to additional bonding capacity.
These agreements will provide $60 million in bonding capacity, of which $20 million has already been drawn and $40 million is immediately available to the company. An additional $150 million is available, but the money is subject to the company meeting certain collateral requirements and contingent on the approval of the bank group.
Several electrical distributors are among Encompass' 50 largest unsecured creditors, according to court documents of the United States Bankruptcy Court, Southern District of Texas, Houston. These companies include: The Reynolds Co., Dallas ($8,273,000); GE Supply, Smryna, Ga. ($3,685,000); Graybar Electric Co., St. Louis ($3,570,000); Hughes Supply Inc., Orlando, Fla. ($3,264,000); Crescent Electric Supply Co., East Dubuque, Ill. ($1,648,000); Anixter Inc., Skokie, Ill. ($1,096,000); WESCO Distribution Inc., Pittsburgh ($928,000); and Brown Wholesale Inc., Phoenix ($674,000).
Encompass had sales of $1.6 billion in 2001 and was ranked as the second largest electrical contractor in the United States in the CEE News magazine's Top 50 listing of electrical contractors.
When the company filed for bankruptcy, Joe Ivey, Encompass president and CEO, said the filing “alleviates much of the uncertainty that has surrounded our business in the last few weeks and months,” and that the company “looks forward to moving rapidly through the Chapter 11 process.”