HomeTop MoversHC2 Holdings, Inc. (HCHC) Stock Continues Gradual Rise Following Acquisition of Banker...

HC2 Holdings, Inc. (HCHC) Stock Continues Gradual Rise Following Acquisition of Banker Steel

HC2 Holdings, Inc. (HCHC) stock prices were up a marginal 0.23% as of the market closing on June 4th, 2021, bringing the price per share up to USD$4.31 at the end of the trading day. After-hours trading saw the stock surge by 10.21%, bringing it up to USD$4.75.

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Acquisition of Banker Steel

The company announced on May 27th, 2021 the completion of the acquisition of a 100% interest in Banker Steel Holdco by HCHC’s infrastructure business, DBM Global. The company also announced that it had entered a new credit agreement that will see the provision of a USD$110 million term loan, as well as a USD$110 million revolving credit facility. The capital generated will be used to repay DBM’s existing debt obligations in full, partially fund the acquisition of Banker Steel, as well as to provide additional working capital capacity.


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Cost of Acquisition

The acquisition of the Banker Steel network of companies came with a purchase price of USD$145 million, subject to working capital and other customary post-closing adjustments. The acquisition was financed with USD$64.1 million with the capital generated from the company’s new term loan and revolving credit facility; USD$49.6 million with proceeds from sellers’ notes; and USD$6.3 million of the assumed debt of Banker Steel. USD$25 million was also generated in cash from the company’s settlement of certain intercompany balances.

About Banker Steel

Now a wholly owned subsidiary of DBM, the Virginia-based Banker Steel facilitates the provision of fabricated structural steel and erection service, with their clientele primarily spanning the East Coast and Southeast commercial and industrial construction markets. Banker Steel consists of 6 operating companies, which will continue operations under their existing CEO and executive team.

Scope of Acquisition

Banker Steel was targeted for acquisition based on their status as an industry leader, and the stellar track record to prove it. With a backlog amounting to more than USD$800 million as of the end of April, the company has managed marquee projects for the likes of JP Morgan and Barclay’s. HCHC hopes the company’s control of the Eastern US markets will substantially complement HCHC’s predominantly West Coast focused market footprint.

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Future Outlook for HCHC

Armed with a gigantic new acquisition, HCHC is set to capitalize on the geographical market segments that it hitherto missed out on. With this consolidated market footprint, the company is keen to continue its trajectory of success and usher in further growth. Current and potential investors are hopeful that management will continue to leverage the resources at their disposal to facilitate significant and sustained increases in shareholder value.

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