SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) August 5, 2004
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ENGLOBAL CORPORATION
(Exact name of registrant as specified in its chapter)
Nevada 001-14217 88-0322261
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
600 Century Plaza Drive, Suite 140, Houston, Texas 77073-6033
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 281-821-3200
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(Former name or former address, if changed since last report)
Item 5. Other Events and Regulation FD Disclosure
On August 5, 2004, ENGlobal Corporation issued a press release, a copy of which
is set forth below. In accordance with General Instructions B.2. of Form 8-K,
the following information shall not be deemed "filed" for purposes of Section 18
of the Securities Exchange Act of 1934, as amended, nor shall it be deemed
incorporated by reference in any filing under the Securities Act of 1933, as
amended, except as shall be expressly set forth by specific reference in such a
filing.
ENGLOBAL CORPORATION ANNOUNCES BANK REFINANCING WITH COMERICA BANK
HOUSTON, TX, AUGUST 5, 2004 - ENGlobal Corporation (AMEX: ENG), a leading
provider of engineering services, today announced that it has successfully
refinanced its bank debt. The new facility, obtained from Comerica Bank
("Comerica"), provides $22 million in senior debt, subject to borrowing base
restrictions. At the election of the Company, the interest rate on the
outstanding debt will be the lower of prime or a three-tiered Eurodollar rate,
plus basis points based on the ratio of the Company's total funded debt to
EBITDA for the trailing 12 months, subject to quarterly adjustments. The Company
anticipates substantial savings over the three year term of the new credit
facility.
The new credit facility enables ENGlobal to reduce its interest expense and
administrative costs, retire outstanding debt that carried a higher interest
rate, and have funds available to finance its future growth. In addition, the
terms of the new loan eliminate annual loan service fees, and are expected to
reduce ENGlobal's audit and legal expenses.
The initial funding on the Comerica line of credit was approximately $8.6
million. The Company used a portion of the funds to pay its Fleet Capital
Corporation ("Fleet") credit facility in full. The Company was in compliance
with all covenants under the terms of the Fleet credit facility as of June 30,
2004, the Company's last reporting date under that facility. The Company also
paid $2,156,000 in principal and interest to retire the balance of a $3 million
term loan executed in December 2001. The loan bore interest at 9.5%, with
principal and interest payments due quarterly. The loan had been scheduled to
mature in December 2005. The remaining borrowings available under the line of
credit on the July 28, 2004 funding date were approximately $7.5 million.
ENGlobal's Chief Financial Officer, Robert W. Raiford, said, "We are very
pleased to have refinanced our debt into a structure that better suits our
current financial and operational objectives. As a result of the refinancing,
our annual cost of debt has been reduced, we have maintained functionality
provided by a traditional revolver to meet day-to-day operational needs, and we
have gained flexibility to support the Company's acquisition strategy."
"We are pleased to provide this credit facility to ENGlobal Corporation," said
Gary Orr, Houston Market President for Comerica Bank. "Comerica is committed to
supporting companies such as ENGlobal that demonstrate sound fundamentals
necessary for long-term success. Our wealth of experience in serving the
financial services needs of businesses is reflected in our outstanding
portfolio, which includes many innovative companies like ENGlobal."
The Company will file a Form 8-K with the Securities and Exchange Commission
containing the full text of the new bank debt agreement.
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About ENGlobal Corporation
ENGlobal Corporation provides engineering services and systems principally to
the petroleum refining, petrochemical, pipeline, production, and process
industries throughout the United States and internationally. ENGlobal's
multi-disciplinary engineering services group develops projects from the initial
planning stage through detailed design, procurement, and construction
management. The systems group develops, manufactures, installs, and services
control and instrumentation systems utilized in various energy and
process-related industries. This group also provides services and products that
support the advanced automation and environmental technology fields. The
Company, with its subsidiaries, now employs over 1,000 employees and occupies
over 250,000 square feet of office and manufacturing space. In 2004, the Company
was named the fastest growing engineering firm in the United States by
ZweigWhite. Further information about the Company and its subsidiaries is
available at www.ENGlobal.com.
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About Comerica Bank
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Comerica Incorporated is a financial services company headquartered in Detroit,
strategically aligned into three major lines of business: the Business Bank,
Small Business and Personal Financial Services, and Wealth and Institutional
Management. Since 1849, Comerica has focused on relationships and helping
businesses and people to be successful. More information is available at
www.Comerica.com.
Safe Harbor for Forward-Looking Statements
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Certain matters discussed in this press release may constitute forward-looking
statements within the meaning of the federal securities laws and are subject to
risks and uncertainties including, but not limited to, the Company's ability to
achieve its business strategy while effectively managing costs and expenses.
Actual results and the timing of certain events could differ materially from
those projected in or contemplated by the forward-looking statements due to a
number of factors detailed from time to time in ENGlobal's filings with the
Securities and Exchange Commission. Reference is hereby made to cautionary
statements set forth in the Company's Form 10-K for the year ended December 31,
2003, Form 10-Q's for the quarters ended March 31, 2004, September 30, 2003 and
June 30, 2003, current Forms 8-K, and other SEC filings. Among other matters,
there can be no assurance that the credit facility will enable the Company to
achieve its growth objectives or that it will save expenses as anticipated. In
addition, the information contained in this press release is also subject to the
risk factors identified in the Company's Annual Report on Form 10-K for the year
ended December 31, 2003.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
Number Exhibit
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10.1 Credit Agreement by and between Comerica Bank and ENGlobal
Corporation and its subsidiaries dated July 27, 2004
10.2 Security Agreement by and between Comerica Bank and ENGlobal
Corporation and its subsidiaries dated July 27, 2004
10.3 Master Revolving Note by and between Comerica Bank and ENGlobal
Corporation and its subsidiaries dated July 27, 2004
99.1 Press Release, dated August 5, 2004, of ENGlobal Corporation
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ENGlobal Corporation
Date: August 6, 2004 /s/ Natalie S. Hairston
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Natalie S. Hairston
Investor Relations Officer
Chief Governance Officer and Corporate Secretary