Constellis, the Reston, Va.-based parent of U.S. Energy Department contractor Centerra Group, has reached a “forbearance agreement” with certain creditors in order to get some leeway on loan repayment while it works to shore up its balance sheet.
“Constellis recently closed on a $110 million delayed-draw credit facility provided by a subset of its existing lenders,” spokesman Tim Ragones said in an emailed statement Tuesday. As part of the process, the company has “entered into a forbearance agreement, which provides additional time and flexibility to continue discussions around de-levering and recapitalizing our balance sheet for the future.”
Forbearance is an agreement in which a lender holds off on any legal actions to force repayment for a period of time so long as certain conditions are met.
Based in Palm Beach Gardens, Fla., Centerra Group describes itself as one of the largest U.S. government providers of general security, nuclear security, fire protection, and emergency services.
Centerra is the security contractor for the DOE Savannah River Site in South Carolina under a $1 billion award from October 2009 that has been extended into February. Centerra has also indicated it is seeking to retain the business under an ongoing DOE procurement, protecting people, buildings, and nuclear material held by the department’s nuclear cleanup office and the National Nuclear Security Administration.
Constellis operates in 30 counties and has 22,000 employees.
The company’s balance sheet recently prompted credit downgrades from the Moody’s and Standard and Poor’s ratings agencies. In addition, CBS News reported Jan. 6 that Constellis could enter bankruptcy reorganization by early February. Constellis had not filed for Chapter 11 reorganization as of Thursday evening.
In a Jan. 3 notice, Moody’s said it instituted the ratings downgrade after the $110 million credit agreement was reached Dec. 17 in the form of a revision to Constellis’ existing lien.
“The downgrades follow a limited default on the company’s existing term debt given a missed amortization payment that was due on December 31, 2019, and more broadly reflect an anticipated near-term restructuring of Constellis’ obligations either through a consensual agreement with creditors or prepackaged bankruptcy court proceedings,” said Moody’s analyst Bruce Herskovics in a document that accompanied the downgrade.
During its ongoing discussions with creditors, Constellis plans to “continue to operate our business, execute our business strategy and meet our stakeholder obligations,” Ragones stated. “We look forward to continuing to support our customers through the successful implementation of our sophisticated and specialized” programs for the Energy Department and its semiautonomous National Nuclear Security Administration.
Editor’s Note: An earlier version of this article featured an incorrect date for the end of Centerra’s paramilitary security contract extension at Savannah River Site in South Carolina. The current extension expires in February, with potential further options through October.
