8-K: Team Inc. Announces Refinancing Transaction, Lowering Cost of Capital and Extending Maturities

Team Inc. successfully closed a refinancing transaction, lowering its cost of capital and extending debt maturities to 2030.

Summary

• Team Inc. has completed a refinancing transaction involving a First Lien Term Loan Facility from HPS Investment Partners, LLC, maturing in March 2030, consisting of a $175 million term loan and a $50 million delayed draw term loan.
• The First Lien Facility bears interest at SOFR plus a spread between 6.0% and 7.0%, improving the company's blended interest rate by over 100 basis points.
• The proceeds were used to repay $35 million in delayed draw term loans and $22.3 million in equipment and real estate loans under its ABL credit agreement, a $46.3 million senior secured incremental term loan provided by Corre Partners Management, LLC, and $54.1 million of its existing senior secured term loan provided by Corre.
• The company also rolled over its remaining debt into a new $97.4 million Second Lien Term Loan provided by Corre, maturing in June 2030.
• The existing ABL credit facility with Eclipse Business Capital was amended to permit the transaction.
• The company's improved operating performance and cash flow were key to completing the refinancing, which extends term loan maturities to 2030 and lowers the cost of capital.

Sentiment

Score: 8

Explanation: The sentiment is positive due to the successful refinancing, which lowers the cost of capital and extends debt maturities. Management's comments are optimistic, and the company is now better positioned for future growth.

Positives

• The refinancing lowers the company's cost of capital.
• The transaction significantly improves financial flexibility by extending term loan maturities to 2030.
• The company is now better positioned to execute on initiatives to drive topline growth, lower costs, and improve cash flow.

Risks

• The forward-looking statements involve estimates, assumptions, judgments, and uncertainties.
• There are known and unknown factors that could cause actual results or outcomes to differ materially from those addressed in the forward-looking information.
• These factors include the duration and magnitude of accidents, extreme weather, natural disasters, and pandemics and related global economic effects and inflationary pressures.

Future Outlook

The company is better positioned to execute on initiatives to drive topline growth, lower cost structure, and improve cash flow, creating long-term value for shareholders.

Management Comments

• Keith D. Tucker, TEAM’s Chief Executive Officer, stated that the refinancing lowers the cost of capital and significantly improves financial flexibility by extending term loan maturities to 2030.
• He also thanked Corre and Eclipse for their continued support and confidence in TEAM and expressed excitement about working with new lending partners at HPS.

Industry Context

This announcement reflects a broader trend of companies seeking to optimize their capital structures in response to changing market conditions and interest rates. Refinancing transactions are common in industries with stable cash flows, allowing companies to reduce borrowing costs and extend debt maturities.

Stakeholder Impact

• Shareholders: The refinancing is expected to create long-term value for shareholders.
• Creditors: The new debt structure provides clarity and extends the maturity profile.
• Employees: Improved financial stability can lead to greater job security and opportunities.

Next Steps

• The company will continue to execute on its ongoing initiatives to drive topline growth, lower its cost structure, and improve its cash flow.

Key Dates