Gulf Island Announces Sale of Shipyard Division Assets and Long-Term Contracts

HOUSTON, April 19, 2021 (GLOBE NEWSWIRE) -- Gulf Island Fabrication, Inc. ("Gulf Island" or the "Company") (NASDAQ: GIFI) today announced it has sold the assets and certain long-term vessel construction contracts of the Shipyard Division to Bollinger Shipyards, L.L.C. (“Bollinger Shipyards”) for approximately $28.6 million. Net cash proceeds resulting from the transaction are anticipated to be approximately $15 million after payment of retained working capital liabilities associated with the divested construction contracts and transaction costs and adjustments to account for changes in working capital from December 31, 2020 through the closing date. The net cash proceeds are expected to be used to fund net working capital liabilities associated with retained construction contracts and other Shipyard Division liabilities and the wind down of the Shipyard Division operations.

TRANSACTION RATIONALE

• Transforms Gulf Island into a more focused, specialty fabrication business. Positions the Company for profitable growth in existing and new higher-margin markets.
• Improves risk profile. Removes future risks associated with existing, long-term contracts that represent ~90% of the Company’s current backlog that extends through 2024.
• Strengthens liquidity. Reduces the Company’s bonding, letters of credit and working capital requirements and is expected to lessen quarterly working capital fluctuations.
  

“This is a transformational transaction for Gulf Island, as it will enable us to accelerate our strategic priorities by significantly de-risking our business and positioning us to pursue new, higher-margin opportunities within our Fabrication & Services Division. We are well-positioned given the strategic initiatives implemented over the past year and we are excited by the opportunities for profitable growth that lay ahead,” said Richard Heo, Gulf Island’s President and Chief Executive Officer.

“I would like to thank our Shipyard team for their relentless commitment to quality and safety, while delivering on our obligations to our customers. We believe this divestiture is in the best interest of all our stakeholders, including our shareholders, employees and customers,” continued Heo.

“This transaction further supports our key strategic priorities of improving our financial strength and pursuing growth opportunities. As we focus on diversifying into new end markets with our Fabrication & Services Division, we will continue to deliver high-quality fabrication solutions to an expanded base of customers,” concluded Heo.