BLUE BELL, PA — QualTek Services Inc. (NASDAQ: QTEK) recently announced a restructuring transaction that is expected to position it to achieve long-term success in the telecom, renewables, and recovery logistics sectors. The restructuring transaction reduces the Company’s debt by approximately $307 million and provides $40 million of additional liquidity, substantially improving the Company’s balance sheet and financial position.
To facilitate the financial restructuring, the Company and certain of its subsidiaries have filed voluntarily petitions for Chapter 11 cases in the United States Bankruptcy Court for the Southern District of Texas. QualTek expects significant support of its lenders through this process, including at least 85% of the Company’s secured debt holders and approximately 80% of its convertible noteholders. The Company will be filing a Restructuring Support Agreement (“RSA”) and Plan of Reorganization (“Plan”), which contemplates that, upon emergence from Chapter 11, there will be new ownership comprised of the Company’s existing lenders and management team.
“For more than a decade, QualTek has provided critical services across the U.S. telecommunications and utilities industries,” said QualTek’s Chief Executive Officer Scott Hisey. “The transactions announced today will position our company to continue providing best-in-class service to our customers, remain a dedicated employer of our military veterans, and build on our industry-respected track record. We are entering this process with the overwhelming support of our lenders and customers, which we expect will enable us to move through this process quickly and without disruption. With the continued dedication of our employees and partners, we plan to emerge stronger and ready to build for the future.”
The RSA provides a better roadmap for QualTek to emerge swiftly from Chapter 11 with a strong balance sheet and positioned to invest in growth. Under the terms of the RSA, the Company contemplates a $65 million debtor-in-possession term loan financing facility (“DIP Facility”), which will include a new money funding of $40 million. Upon approval by the Court, the DIP Facility will provide the Company with the stability and liquidity needed to continue operations in the ordinary course of business and pay vendors during the reorganization. Management continues to lead the business, roles and responsibilities across the team remain the same, and operations across the Company are expected to continue as usual.
Additional Information about the Financial Restructuring
QualTek is filing customary “First Day Motions” with the Court to facilitate a smooth transition into Chapter 11. These motions, which the Company expects to be approved in short order, include requests to pay wages and benefits, pay trade vendors, and ensure the continuation of business operations without interruption. The Company will continue servicing its existing customers, vendors, partners, and other stakeholders in the ordinary course of business.
Additional information about the Company’s financial restructuring is available on the website of its claims agent, Epiq, at https://dm.epiq11.com/QualTek. With questions, stakeholders can contact Epiq at (877) 609-4009 Toll Free or +1 (503) 447-4703 from outside the U.S. or Canada, or by emailing QualTek@epiqglobal.com.
Advisors
Kirkland & Ellis LLP and Jackson Walker LLP are serving as legal counsel, Jefferies is serving as investment banker, and Alvarez & Marsal is serving as financial advisor to the Company. The Company has retained C Street Advisory Group to serve as the strategy and communications advisor.
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