Gulf Island Resolves MPSV Litigation
05 October 2023 - 11:30PM
Gulf Island Fabrication, Inc. (NASDAQ: GIFI) (“Gulf Island”
or the “Company”), a leading steel fabricator and service
provider to the industrial and energy sectors, today announced that
its subsidiary, Gulf Island Shipyards, LLC (“GIS”), has resolved
its lawsuit with Hornbeck Offshore Services, LLC (“Hornbeck”)
relating to the construction of two multi-purpose supply vessels
(“MPSV”).
In connection with the resolution, the court
dismissed the lawsuit at the request of the parties to the
litigation. Further, Gulf Island, GIS, Fidelity & Deposit
Company of Maryland (“FDC”) and Zurich American Insurance Company
(together with FDC, “Zurich”), the issuer of the performance bonds
for the MPSV contracts, entered into a binding term sheet relating
to the settlement of Gulf Island and GIS’s obligations under the
performance bonds and any indemnity agreements relating to such
bonds. In exchange, Gulf Island and Zurich will enter into a note
agreement pursuant to which Gulf Island will pay Zurich $20.0
million, plus interest at a rate of 3.0% per annum, payable in
fifteen equal annual installments commencing on December 31, 2024.
Gulf Island and GIS also agreed to release possession of the MPSVs
to Zurich.
“We are pleased to be putting this matter behind
us and believe this resolution is in the best interest of all of
our stakeholders,” said Richard Heo, Gulf Island’s President and
Chief Executive Officer. “The resolution will eliminate ongoing
legal and vessel holding costs and removes the uncertainty and risk
of a potential adverse outcome inherent in any jury trial. The
agreement with Zurich for payments over fifteen years will position
us to remain in a strong financial position with sufficient
liquidity to continue to pursue our strategic objectives.
Importantly, the resolution removes a significant distraction,
which combined with the completion of the wind-down of our shipyard
operations, will enable us to focus our efforts on profitably
growing the business,” concluded Heo.
ABOUT GULF ISLAND
Gulf Island is a leading fabricator of complex
steel structures and modules and provider of specialty services,
including project management, hookup, commissioning, repair,
maintenance, scaffolding, coatings, welding enclosures, civil
construction and staffing services to the industrial and energy
sectors. The Company’s customers include U.S. and, to a lesser
extent, international energy producers; refining, petrochemical,
LNG, industrial and power operators; and EPC companies. The Company
is headquartered in The Woodlands, Texas and its primary operating
facilities are located in Houma, Louisiana.
CAUTIONARY STATEMENT
This release contains forward-looking
statements. Forward-looking statements, within the meaning of the
safe harbor provisions of the U.S. Private Securities Litigation
Reform Act of 1995, are all statements other than statements of
historical facts, such as projections or expectations relating to
the wind down of the Company’s Shipyard Division operations; entry
into final agreements relating to the settlement; the impacts of
the resolution of the MPSV Litigation; financial position and
liquidity; and execution of strategic initiatives. The words
“anticipates,” “may,” “can,” “plans,” “believes,” “estimates,”
“expects,” “projects,” “targets,” “intends,” “likely,” “will,”
“should,” “to be,” “potential” and any similar expressions are
intended to identify those assertions as forward-looking
statements.
The Company cautions readers that
forward-looking statements are not guarantees of future performance
and actual results may differ materially from those anticipated,
projected or assumed in the forward-looking statements. Important
factors that can cause its actual results to differ materially from
those anticipated in the forward-looking statements include: the
parties timely entry into final agreements related to the
settlement; supply chain disruptions (including global shipping and
logistics challenges), inflationary pressures, economic slowdowns
and recessions, banking industry disruptions, natural disasters,
public health crises (such as COVID-19), labor costs and
geopolitical conflicts (such as the conflict in Ukraine), and the
related volatility in oil and gas prices and other factors
impacting the global economy; cyclical nature of the oil and gas
industry; the Company’s ability to resolve any other material legal
proceedings; competition; reliance on significant customers;
competitive pricing and cost overruns on its projects; performance
of subcontractors and dependence on suppliers; timing and its
ability to secure and commence execution of new project awards,
including fabrication projects for refining, petrochemical, LNG,
industrial and sustainable energy end markets; the Company’s
ability to maintain and further improve project execution; nature
of its contract terms and customer adherence to such terms;
suspension or termination of projects; changes in contract
estimates; customer or subcontractor disputes; operating dangers,
weather events and limits on insurance coverage; operability and
adequacy of its major equipment; final assessment of damage at the
Company's Houma Facilities and the related recovery of any
insurance proceeds; its ability to raise additional capital; its
ability to amend or obtain new debt financing or credit facilities
on favorable terms; its ability to generate sufficient cash flow;
its ability to obtain letters of credit or surety bonds and ability
to meet any indemnification obligations thereunder; consolidation
of its customers; financial ability and credit worthiness of its
customers; adjustments to previously reported profits or losses
under the percentage-of-completion method; its ability to employ a
skilled workforce; loss of key personnel; utilization of facilities
or closure or consolidation of facilities; failure of its safety
assurance program; barriers to entry into new lines of business;
weather impacts to operations; any future asset impairments;
changes in trade policies of the U.S. and other countries;
compliance with regulatory and environmental laws; lack of
navigability of canals and rivers; systems and information
technology interruption or failure and data security breaches;
performance of partners in any future joint ventures and other
strategic alliances; shareholder activism; focus on environmental,
social and governance factors by institutional investors and
regulators; and other factors described under “Risk Factors” in
Part I, Item 1A of the Company’s annual report on Form 10-K for the
year ending December 31, 2022, as updated by subsequent filings
with the SEC.
Additional factors or risks that the Company
currently deems immaterial, that are not presently known to the
Company or that arise in the future could also cause the Company’s
actual results to differ materially from its expected results.
Given these uncertainties, investors are cautioned that many of the
assumptions upon which the Company’s forward-looking statements are
based are likely to change after the date the forward-looking
statements are made, which it cannot control. Further, the Company
may make changes to its business plans that could affect its
results. The Company cautions investors that it undertakes no
obligation to publicly update or revise any forward-looking
statements, which speak only as of the date made, for any reason,
whether as a result of new information, future events or
developments, changed circumstances, or otherwise, and
notwithstanding any changes in its assumptions, changes in business
plans, actual experience or other changes.
COMPANY INFORMATION
Richard W. Heo |
Westley S. Stockton |
Chief Executive Officer |
Chief Financial Officer |
713.714.6100 |
713.714.6100 |
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