Shares Plummet After Chapter 11 Filings
Houston-based company, Orbital Infrastructure Group and its multiple subsidiaries have experienced a significant drop in their shares as they filed voluntary Chapter 11 petitions in federal bankruptcy court. This unexpected move led to further decline in share prices, following a selloff on Wednesday.
The stock, which started at $1.20, fell by 29% to 85 cents during off-hour trading. This decline came after shares had already dropped by a third earlier in the day, with a staggering 96% decrease over the past year.
Listing Requirements Violation
On Wednesday, Orbital Infrastructure Group revealed that it had received a notice from Nasdaq, stating that the company was in violation of listing requirements due to its failure to file a quarterly report. This initial revelation was the catalyst for the initial rapid decrease in share prices. In response, the company has until August 25 to request a stay on the suspension of its shares from the exchange.
Chapter 11 Protection
Adding to their financial woes, Orbital Infrastructure Group made a late-night announcement on Wednesday that both the company itself and four of its subsidiaries have filed for Chapter 11 protection in the U.S. Bankruptcy Court for the Southern District of Texas.
The future remains uncertain for Orbital Infrastructure Group as it faces the challenges of restructuring and navigating through bankruptcy court.
# Orbital Infrastructure Files for Bankruptcy
Orbital Infrastructure, a leading construction company, has filed for Chapter 11 bankruptcy. However, this filing excludes its subsidiaries, Front Line Power Construction and Gibson Technical Services, as they are currently being sold as part of the bankruptcy process.
Orbital Infrastructure has already entered into purchase agreements with the lenders of both subsidiaries, who are referred to as "stalking horse" bidders. These purchase agreements include terms that will be used to solicit competing offers during a Chapter 11 auction process.
It is important to note that any sale will be subject to approval from the bankruptcy court. Additionally, the successful purchaser will not acquire the other four subsidiaries of Orbital Infrastructure.
To provide additional financial support during this process, the lenders who signed purchase agreements for Front Line and Gibson have also entered into debtor-in-possession financing credit agreements with Orbital Infrastructure. Through these agreements, the company will receive $15 million in incremental liquidity. This funding is crucial for Orbital Infrastructure to continue operating throughout the Chapter 11 process and successfully close the sale transactions.
Chief Executive Jim O'Neil expressed regret over the bankruptcy filing, acknowledging that it was not the desired outcome for shareholders and stakeholders. However, he emphasized that this difficult decision was necessary to secure the sale of the primary and profitable parts of the company as going concerns.
Orbital Infrastructure's Performance Analysis
Financial Performance Regrettably, Orbital Infrastructure has experienced a net loss in each of the past four quarters. This trend raises concerns about the company's financial stability and sustainability.
Quarterly Analysis Let's take a closer look at Orbital Infrastructure's performance on a quarterly basis:
Q1: The company incurred a significant loss during this period, indicating a concerning start to the year.
Q2: Unfortunately, the second quarter also resulted in a net loss for Orbital Infrastructure. This continued downfall demands attention from stakeholders.
Q3: The downward trend persisted in the third quarter, as Orbital Infrastructure again recorded a loss. It is crucial for the company to address the underlying issues causing these unfavorable outcomes.
Q4: Closing the year on a disappointing note, Orbital Infrastructure reported a net loss in the fourth quarter, further exemplifying its financial struggles.
Conclusion Orbital Infrastructure's consistent net losses in the last four reported quarters necessitate a thorough evaluation of its financial strategy. It is vital for the company to identify and rectify the factors contributing to these unfavorable results, ensuring a path towards sustainable growth and profitability.