In a significant development for the energy industry, Orbital Infrastructure Group Inc. (OIG) and several of its subsidiaries, including Orbital Solar Services, Orbital Power, Orbital Gas Systems (North America), and Eclipse Foundation Group, have officially filed voluntary Chapter 11 petitions. This announcement comes as a surprise to many, signaling a pivotal moment for the company and its stakeholders. Notably, the filing excludes Front Line Power Construction (FLP) and Gibson Technical Services (GTS), as these entities are slated for separate sale transactions.

‍

The Unveiling of the Sale Transactions

OIG has embarked on a strategic path by initiating a purchase agreement with the FLP secured lenders. This agreement is set to facilitate the transfer of equity interests in FLP to a designated entity identified by the FLP Lenders. In parallel, a similar purchase agreement is in the works between OIG and the GTS secured lender. This agreement aims to oversee the transition of equity interests in GTS to an entity designated by the GTS Lender.

‍

Jim O'Neil, Vice-Chairman and CEO of OIG, expressed, "Our exhaustive exploration of alternatives has concluded with the Chapter 11 filing. While not our preferred outcome, this decision became necessary to ensure the sale of the Company's core and profitable components as going concerns." This candid admission reflects the complexity of the situation and the company's commitment to navigating it thoughtfully.

‍

The Intricacies of the Sale Process

The outlined transactions with the FLP and GTS Lenders align with the parameters set by Section 363 of the Bankruptcy Code, designating the Lenders as "stalking horse" bidders. The purchase agreements established between OIG and the respective lenders will serve as the benchmarks for assessing competitive offers during a Chapter 11 auction. Seeking Bankruptcy Court endorsement for bidding procedures that allow the submission of optimal purchase offers, OIG remains poised for a meticulous evaluation of bids received. This process will unfold in accordance with stipulated procedures, closely supervised by the Bankruptcy Court.

‍

As part of the agreements, the prospective buyers are set to acquire only specific subsidiaries, excluding Orbital Infrastructure Group Inc., Orbital Solar Services, Orbital Power, Orbital Gas Systems (North America), and Eclipse Foundation Group Inc.

‍

Debtor-in-Possession (DIP) Financing: A Lifeline Amid Restructuring

Understanding the financial requirements during the Chapter 11 proceedings, OIG has secured commitments for debtor-in-possession (DIP) financing credit agreements from both the FLP and GTS Lenders. Once approved by the Bankruptcy Court, these agreements are poised to infuse OIG with the essential liquidity needed for ongoing operations throughout the Chapter 11 journey and the eventual closing of the sale transactions. An estimated $15.0 million of incremental liquidity is anticipated following the initiation of the DIP financing, underscoring the financial stability OIG seeks during this period of transformation.

‍

As Orbital Infrastructure Group Inc. (OIG) navigates through this unprecedented chapter, its strategic decisions and negotiations will undoubtedly set a precedent for the industry. The energy sector watches with keen interest as the company strives to strike a balance between honoring its commitments and forging a sustainable future.