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29 September 2006 -- Global Power Equipment Group Inc. announced that after close of business yesterday, it and all of its U.S. subsidiaries, including Williams Industrial Services Group, L.L.C., Braden Manufacturing, L.L.C. and Deltak, L.L.C., commenced Chapter 11 cases in Delaware bankruptcy court to reorganize their financial affairs and address the ongoing cash drain from Deltak's Heat Recovery Steam Generator (HRSG) business.
The company believes that the Williams and Braden businesses are fundamentally sound and intends to continue to operate those businesses without interruption. Global Power anticipates obtaining court authority by Monday, October 2, to access over $20 million of cash on hand as needed to ensure that Williams' and Braden's ongoing operations are adequately funded. Braden will also seek limited accommodations from its customers to ensure completion of all current projects.
Deltak, which notified its employees of a substantial initial reduction in its workforce prior to the filing, will begin an orderly wind down of its HRSG business, unless it is able to obtain material concessions from its customers regarding the terms on which it would complete its major ongoing projects. Deltak's specialty boiler business will continue operations, subject to obtaining immediate accommodations from certain of its customers.
The company's foreign subsidiaries in Asia, Europe and Mexico are not included in the Chapter 11 filings. Their businesses will continue as usual without oversight by the U.S. Bankruptcy Court.
The company said in a press release that it has experienced escalating losses related to large scale HRSG projects within Deltak. These losses, coupled with Global Power's inability to access its credit facility, have resulted in the Company's liquidity recently becoming significantly constrained. As a result, the Board of Directors concluded, after consultation with its advisors, that the interests of the Company's stakeholders would be best served by reorganizing under Chapter 11 of the U.S. Bankruptcy Code.
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