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SUBSEQUENT EVENTS | 3 Months Ended
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Mar. 31, 2021
Subsequent Events [Abstract] |
SUBSEQUENT EVENTS | 8. SUBSEQUENT EVENTS Shipyard Transaction – On April 19, 2021 (the “Closing Date” or at “Closing”), we entered into a definitive agreement (the “Purchase Agreement”) pursuant to which we sold the assets and certain vessel construction contracts of our Shipyard Division (“Shipyard Transaction”) to Bollinger Houma Shipyards, L.L.C. and Bollinger Shipyards Lockport, L.L.C. (collectively, “Bollinger”) for approximately $28.6 million (“Transaction Price”) ($26.1 million, net of estimated transaction and other costs). We received $26.4 million of the Transaction Price on the Closing Date and the remainder will be received upon Bollinger’s collection of certain customer payments associated with the Divested Shipyard Contracts (defined below). At Closing, we also received $8.0 million from Bollinger, representing an estimate of the change in working capital for the Divested Shipyard Contracts from December 31, 2020 through the Closing Date (the “Closing Adjustment”). Actual changes in working capital for the Divested Shipyard Contracts from December 31, 2020 through March 31, 2021 totaled approximately $3.0 million. The Closing Adjustment is subject to a post-closing reconciliation and true-up (“Closing Adjustment True-Up”) based on actual changes in working capital for the Divested Shipyard Contracts from December 31, 2020 through the Closing Date compared to the Closing Adjustment. In connection with the Shipyard Transaction, we retained approximately $11.2 million in net working capital liabilities associated with the Divested Shipyard Contracts. Our net cash proceeds inclusive of the Closing Adjustment and estimated Closing Adjustment True-up, will be used to fund (i) the retained working capital liabilities associated with the Divested Shipyard Contracts (which totaled approximately $10.4 million and $11.2 million at March 31, 2021 and December 31, 2020, respectively), (ii) net working capital liabilities associated with the Retained Shipyard Contracts (defined below) and other Shipyard Division liabilities (which totaled approximately $11.0 million and $13.1 million at March 31, 2021 and December 31, 2020, respectively), and (iii) the wind down of the Shipyard Division operations, which is anticipated to occur by mid-2022. Included in the Shipyard Transaction were the Shipyard Division’s:
| • | Property, inventory and equipment in Houma, Louisiana;
| • | Contracts and related obligations for our three research vessel projects and five towing, salvage and rescue ship projects (collectively, the “Divested Shipyard Contracts”);
| • | Contract retentions, contract assets, contract liabilities and certain accounts payable associated with the Divested Shipyard Contracts as of the Closing Date; and
| • | Four drydocks (of which two were held for sale at March 31, 2021).
Bollinger offered employment to most of the employees of our Shipyard Division associated with the Acquired Shipyard Contracts. Excluded from the Shipyard Transaction were the Shipyard Division’s:
| • | Accounts receivable, certain accounts payable and other accrued liabilities associated with the Divested Shipyard Contracts as of the Closing Date;
| • | Contracts and related obligations for our (i) two forty-vehicle ferry projects, (ii) seventy-vehicle ferry project and (iii) two MPSV projects (which are subject to dispute) (collectively, the “Retained Shipyard Contracts”), together with the associated accounts receivable, accounts payable and other accrued liabilities;
| • | The Lake Charles Facility and Jennings Facility which were closed in the fourth quarter 2020; and
| • | Remaining assets and liabilities of the Shipyard Division.
We retained those employees of our Shipyard Division associated with the Retained Shipyard Contracts. We anticipate recording a total pre-tax loss of approximately $25.0 million to $26.0 million in connection with the Shipyard Transaction, representing the estimated carry value of the net assets sold on the Closing Date over the Transaction Price, inclusive of the Closing Adjustment, estimated Closing Adjustment True-Up, and transaction and other costs. We recorded $23.4 million of the estimated loss during the three months ended March 31, 2021, related to the impairment of our Shipyard Division’s long-lived assets and transaction costs, and anticipate recording an additional loss of approximately $2.0 million during the second quarter 2021 related to additional transaction and other costs associated with the Shipyard Transaction. At March 31, 2021, the Shipyard Division assets associated with the Shipyard Transaction did not meet the criteria for classification as held for sale, other than the two drydocks previously classified as held for sale at December 31, 2020. See Note 3 for further discussion of the impairment recorded in the first quarter 2021 and our assets held for sale. Mortgage Agreement and Restrictive Covenant Agreement – On April 19, 2021, and in connection with the receipt of a consent for the Shipyard Transaction from our Surety that has outstanding surety bond obligations for our MPSV projects and two seventy-vehicle ferry projects, we entered into a multiple indebtedness mortgage (the “Mortgage Agreement”) and a restrictive covenant arrangement (the “Restrictive Covenant Agreement”) with the Surety to secure our obligations and liabilities under our general indemnity agreement with the Surety associated with its outstanding surety bonds for the contracts. The Mortgage Agreement encumbers all remaining real estate that was not sold in connection with the Shipyard Transaction and includes certain covenants and events of default. Further, the Restrictive Covenant Agreement precludes us from making dividends or repurchasing shares of our common stock. The Mortgage Agreement and Restrictive Covenant Agreement will terminate when the obligations and liabilities of the Surety associated with the outstanding surety bonds are discharged, or any judgment against us or the Surety arising out of litigation related to such contracts is satisfied by us.

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- Definition The entire disclosure for significant events or transactions that occurred after the balance sheet date through the date the financial statements were issued or the date the financial statements were available to be issued. Examples include: the sale of a capital stock issue, purchase of a business, settlement of litigation, catastrophic loss, significant foreign exchange rate changes, loans to insiders or affiliates, and transactions not in the ordinary course of business. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 855 -URI http://asc.fasb.org/topic&trid=2122774 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 855 -SubTopic 10 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6842918&loc=SL6314017-165662 + Details
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