ENGlobal agrees to sell Gulf Coast operations to Furmanite

ENGlobal Corp.

ENGlobal Corp. (Nasdaq:ENG), a provider of energy-related engineering and automation services, has signed a definitive agreement under which ENGlobal's Gulf Coast engineering and in-plant operations will be sold to Furmanite America Inc. (FAI), a subsidiary of Furmanite Corp. (NYSE:FRM). The total value of the transaction to ENGlobal is expected to be approximately $21.5 million, consisting primarily of cash at closing and a $3.5 million promissory note issued with a parent company guarantee.

ENGlobal's Gulf Coast engineering operations consist of its Beaumont, Texas; Baton Rouge, Louisiana; Lake Charles, Louisiana; Deer Park, Texas; and Freeport, Texas, offices, which primarily perform work for downstream clients across the region. The company will retain its engineering operations and the entirety of its automation operations located in Houston, Texas; Tulsa, Oklahoma; Mobile, Alabama; Denver, Colorado; and Chicago, Illinois, which primarily perform midstream- and downstream-related projects.

ENGlobal intends to use the net proceeds from this transaction to repay its outstanding debt. The transaction has been approved by the boards of directors for both companies, and is expected to close within 60 days, subject to lender approval and the completion of customary conditions. In addition, the companies have agreed to facilitate a smooth transition of corporate service functions and to support each company's business development efforts. Under terms of the agreement, approximately 900 employees will transfer from ENGlobal to Furmanite.

The company expects that this transaction will substantially complete its review of strategic alternatives. In October 2012, ENGlobal announced its plan to explore strategic alternative options, which included raising capital, selling a portion of the company's assets, and the possible sale or merger of ENGlobal, among other alternatives. Since that time, the company discontinued its Electrical Services division and divested its Land/Right of Way and Midstream Inspection divisions.



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