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ENGlobal Corp (NASDAQ:ENGC), an engineering services firm with a market capitalization of $74 million, has entered into a debtor-in-possession (DIP) credit agreement providing a $2.5 million loan to support operations during its Chapter 11 bankruptcy proceedings, according to a recent SEC filing. According to InvestingPro data, the company maintains an excellent financial health score of 4.23 despite its current challenges. The agreement, dated March 5, 2025, with Gulf Island Fabrication, Inc. as lender, was approved by the U.S. Bankruptcy Court for the Southern District of Texas on March 6, 2025.
The Houston-based company, along with its domestic subsidiaries, filed for Chapter 11 protection on March 6, 2025, aiming to restructure its debt and secure a stable financial position. As debtors-in-possession, they continue to manage their businesses under court supervision.
The DIP financing, bearing an annual interest rate of 12%, is secured by a first priority lien on ENGlobal’s assets and is subject to court-approved budgets and conditions. The loan is set to mature at the earliest of six months from the petition date, 45 days after the interim order if a final order is not received, completion of a sale of the company or its assets, the substantial consummation of a reorganization or liquidation plan, or upon loan acceleration due to default.
ENGlobal’s use of the DIP funds is restricted to working capital, corporate expenses, payment of loan-related costs, and bankruptcy expenses, including professional fees. While the stock has shown strong momentum with an 8.7% gain over the past week and trades near its 52-week high of $0.54, the company has cautioned that trading in its securities during the Chapter 11 process is speculative and risky, with potential outcomes uncertain. For deeper insights into ENGC’s financial metrics and additional trading signals, InvestingPro subscribers have access to over 30 exclusive financial indicators and real-time alerts.
This financial move is part of ENGlobal’s broader efforts to navigate through bankruptcy and stabilize its operations. Trading at a P/E ratio of 11.37, the company’s future actions, including court approvals, financing negotiations, and the potential impact on its business and securities, are forward-looking statements subject to risks and uncertainties.
This report is based on information from a press release statement.
In other recent news, ENGlobal Corp has voluntarily filed for Chapter 11 bankruptcy protection, as noted in a recent SEC filing. The company, along with its subsidiaries, is operating as a debtor-in-possession and is seeking a court-supervised sale to maintain its business operations. ENGlobal is in discussions with a potential stalking horse bidder for debtor-in-possession financing, aiming to present an agreement to the court soon. Additionally, ENGlobal secured a $500,000 loan with asset-backed terms, carrying a 12% annual interest rate, to bolster its financial position. This loan agreement restricts the company’s ability to engage in certain financial and operational activities without the lender’s consent. Furthermore, ENGlobal’s shareholders have approved the board appointments and ratified the selection of M&K CPAS, PLLC as the independent auditors for the fiscal year 2024. The shareholder voting results indicate strong support for the current leadership and governance practices. These developments highlight ENGlobal’s ongoing efforts to navigate financial challenges while maintaining operational transparency.
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