Chart Industries finds banks keen to lend $1.1Bln for acquisition of gas compression cooler business

Tuesday, 11 June 2019
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Chart Industries, the US LNG and industrial gases equipment provider, has received commitments for $1.1 billion in financing to help fund the acquisition and integration of Harsco Corp.’s industrial Air-X-Changers business, Harsco AXC.

Chart said the funding consists of a revolving credit facility and a new term loan, both of which were over-subscribed by banks keen to lend.

Cash

The financing will provide available cash for Chart’s previously announced takeover of Harsco AXC with the deal now expected to close on July 1.

“We are very pleased with the overwhelming support from existing and new banks to offer committed funding to Chart,” said Jill Evanko, the Chart Chief Executive.

“Their support further affirms the strategic direction of this acquisition and our plan for profitable future growth,” added Evanko.

Chart, based in the outskirts of Atlanta, Georgia, agreed in May 2019 to take over Harsco in its fourth acquisition in two years as it continues to receive LNG orders for key equipment.

The Harsco AXC business specializes in gas compression coolers.

The company reiterated its full year 2019 sales forecast of between $1.41 billion and $1.46Bln.

“Our guidance assumes LNG project revenue in 2019 from the Venture Global Calcasieu Pass and ‘Golar Gimi’ (LNG production hull) projects of $28 million to $30 million, subject to project timing,” explained Chart.

Harsco AXC is projected to generate net sales of around $260 million in 2019, and a 23 percent gross earnings margin as a percentage of sales.

“With over $20M of cost synergies expected in the first 12 months of ownership, we expect further margin expansion in the business,” said Chart.

The Chart acquisition is the fourth in the past two years after other takeovers in the US and Europe.

Chart first expanded its business in 2017 by acquiring German company VCT Vogel, a servicer of cryogenic and mobile gas tank equipment and trucks and a European leader in truck-mounted drive and control systems.

The takeover of the German company followed its $410M cash purchase of smaller US sector rival Hudson Products for its range of air-cooled heat exchangers and axial flow cooling fans for the refining, petrochemical and natural gas markets.

Then in September 2018, Chart agreed to acquire Italian company VRV S.p.a., an engineer and designer of cryogenic equipment whose offerings also complement Chart’s products.

The Harsco group said the proceeds from selling its Harsco AXC gas compression subsidiary would be used to pay debts and provide the parent company with additional financial flexibility to continue investing in other growth opportunities.

Harsco recently entered into an agreement to acquire Clean Earth Inc., a specialty waste company, further accelerating its transformation into an environmental solutions operator.

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