Filed Pursuant to Rule 424(b)(3)
Registration No. 333-267477
Prospectus Supplement No. 10
(To Prospectus dated October 6, 2022)
QUALTEK SERVICES INC.
3,589,000 Shares of Class A Common Stock
306,000 warrants by the Selling Stockholders
Senior Convertible Notes due 2027 by the Selling Noteholders
Up to 31,104,034 Shares of Class A Common Stock Underlying 2027
Convertible Notes
This prospectus supplement is being filed to update and supplement the information contained in the prospectus dated October 6, 2022 (the “Prospectus”), related to (a) the resale from time to time of (i) up to 3,589,000 shares of Class A common stock, $0.0001 par value, of QualTek Services Inc. (“Class A Common Stock”) including 306,000 shares of Class A Common Stock issuable upon the exercise of Private Placement Warrants, each exercisable for one share of Class A Common Stock at a price of $11.50 per share (“warrants”) and (ii) 306,000 warrants by the selling security holders named in this prospectus (each a “Selling Stockholder,” and, collectively, the “Selling Stockholders”), (b) the resale from time to time of up to $124,685,000 in aggregate principal amount of senior convertible notes due 2027 (the “2027 Convertible Notes”) by the selling holders named in this prospectus (the “Selling Noteholders” and, together with the Selling Stockholders, the “Selling Securityholders”) and (c) the resale from time to time of up to 31,104,034 shares of our Class A Common Stock issuable upon conversion of the 2027 Convertible Notes by the Selling Noteholders (all undefined capitalized terms are as defined in the Prospectus), with the information contained in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the “SEC”) on April 28, 2023 (the “Annual Report”), as amended with the information contained in our Amendment No. 1 to our Annual Report on Form 10-K/A, filed with the SEC on May 2, 2023 (the “Amended Annual Report”). Accordingly, we have attached the Amended Annual Report to this prospectus supplement.
This prospectus supplement updates and supplements the information in the Prospectus and is not complete without, and may not be delivered or utilized except in combination with, the Prospectus, including any amendments or supplements thereto. This prospectus supplement should be read in conjunction with the Prospectus and if there is any inconsistency between the information in the Prospectus and this prospectus supplement, you should rely on the information in this prospectus supplement.
Our Class A Common Stock and warrants are traded on The Nasdaq Capital Market under the symbols “QTEK” and “QTEKW,” respectively. On May 2, 2023, the closing price of our Class A Common Stock and warrants were $0.2496 and $0.0367, respectively.
We are an “emerging growth company” as defined under the federal securities laws and, as such, have elected to comply with certain reduced public company reporting requirements.
Investing in our Class A Common Stock, warrants and 2027 Convertible Notes is highly speculative and involves a high degree of risk. See “Risk Factors” beginning on page 9 of the Annual Report on Form 10-K, filed with the SEC on April 28, 2023, page 17 of the Prospectus and appearing in any applicable prospectus supplement.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued or sold under this prospectus or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is May 2, 2023.
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 83-3584928 | |||||||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
475 Sentry Way Parkway E, Suite 200 | ||||||||
Blue Bell, PA | 19422 | |||||||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||||||||||||
Class A Common Stock | QTEK | The NASDAQ Stock Market LLC | ||||||||||||
Warrants | QTEKW | The NASDAQ Stock Market LLC |
Large accelerated filer | ☐ | Accelerated filer | ☐ | ||||||||
Non-accelerated filer | ☒ | Smaller reporting company | ☒ | ||||||||
Emerging growth company | ☒ |
December 31, | |||||||||||
2022 | 2021 | ||||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash | $ | 495 | $ | 606 | |||||||
Accounts receivable, net of allowance for doubtful accounts of $5,408 and $5,614, respectively | 244,964 | 201,845 | |||||||||
Inventories, net | 9,033 | 5,409 | |||||||||
Prepaid expenses | 5,289 | 12,140 | |||||||||
Other current assets | 2,815 | 2,021 | |||||||||
Current assets of discontinued operations | — | 4,502 | |||||||||
Total current assets | 262,596 | 226,523 | |||||||||
Property and equipment, net of accumulated depreciation of $39,671 and $29,515, respectively | 59,818 | 50,682 | |||||||||
Operating lease right-of-use assets | 28,566 | — | |||||||||
Intangible assets, net | 321,686 | 364,174 | |||||||||
Goodwill | 14,493 | 28,723 | |||||||||
Other non-current assets | 1,768 | 1,657 | |||||||||
Total assets | $ | 688,927 | $ | 671,759 | |||||||
Liabilities and Deficit | |||||||||||
Current liabilities: | |||||||||||
Current portion of long-term debt and finance lease obligations, net of deferred financing costs | $ | 556,426 | $ | 127,375 | |||||||
Current portion of operating lease liability | 9,594 | — | |||||||||
Accounts payable | 83,298 | 60,726 | |||||||||
Accrued expenses | 50,510 | 52,986 | |||||||||
Contract liabilities | 24,094 | 14,773 | |||||||||
Other current liabilities | — | 9,299 | |||||||||
Current liabilities of discontinued operations | — | 2,048 | |||||||||
Total current liabilities | 723,922 | 267,207 | |||||||||
Long-term finance lease liabilities | 22,875 | 19,851 | |||||||||
Long-term operating lease liability | 22,491 | — | |||||||||
Long-term debt, net of current portion and deferred finance costs | — | 418,813 | |||||||||
Tax receivable agreement liabilities | 15,084 | — | |||||||||
Other non-current liabilities | 5,275 | 32,866 | |||||||||
Total liabilities | 789,647 | 738,737 | |||||||||
Commitments and contingencies (Note 16) | |||||||||||
(Deficit) / Equity: | |||||||||||
Class A common stock, $0.0001 par value; 500,000,000 shares authorized, 27,805,659 and 11,923,941 shares issued and outstanding as of December 31, 2022 and 2021, respectively | 3 | 1 | |||||||||
Class B common stock, $0.0001 par value; 500,000,000 shares authorized, 23,304,200 and 13,085,488 shares issued and outstanding as of December 31, 2022 and 2021, respectively | 2 | 1 | |||||||||
Additional paid in capital | 174,112 | 252,593 | |||||||||
Accumulated deficit | (226,648) | (320,080) | |||||||||
Non-controlling interest | (48,189) | — | |||||||||
Accumulated other comprehensive income | — | 507 | |||||||||
Total deficit | (100,720) | (66,978) | |||||||||
Total liabilities and equity | $ | 688,927 | $ | 671,759 |
For the Years Ended December 31, | |||||||||||
2022 | 2021 | ||||||||||
Revenue | $ | 753,856 | $ | 612,241 | |||||||
Costs and expenses: | |||||||||||
Cost of revenues, excluding depreciation and amortization | 665,291 | 502,688 | |||||||||
General and administrative | 69,892 | 50,994 | |||||||||
Transaction expenses | 10,749 | 3,826 | |||||||||
Loss on legal settlement | — | 2,600 | |||||||||
Change in fair value of contingent consideration, net of accretion | (18,058) | (3,575) | |||||||||
Impairment of long-lived assets | 1,007 | — | |||||||||
Impairment of goodwill | 14,160 | 52,487 | |||||||||
Depreciation and amortization | 58,377 | 52,470 | |||||||||
Total costs and expenses | 801,418 | 661,490 | |||||||||
Loss from operations | (47,562) | (49,249) | |||||||||
Other income (expense): | |||||||||||
Gain on sale of property and equipment | 2,087 | 587 | |||||||||
Interest expense | (59,317) | (50,477) | |||||||||
Loss on extinguishment of convertible notes | — | (2,436) | |||||||||
Total other expense | (57,230) | (52,326) | |||||||||
Loss from continuing operations | (104,792) | (101,575) | |||||||||
Loss from discontinued operations | — | (8,851) | |||||||||
Net loss | (104,792) | (110,426) | |||||||||
Less: Net loss attributable to non-controlling interests | (68,372) | — | |||||||||
Net loss attributable to QualTek Services Inc. | (36,420) | (110,426) | |||||||||
Other comprehensive income: | |||||||||||
Foreign currency translation adjustments | — | 111 | |||||||||
Comprehensive loss | $ | (36,420) | $ | (110,315) | |||||||
Denominator: | |||||||||||
Net loss per share - continuing operations - basic | $ | (1.45) | $ | (8.70) | |||||||
Net loss per share - continuing operations - diluted | $ | (1.47) | $ | (8.70) | |||||||
Net loss per share - discontinued operations - basic and diluted | $ | — | $ | (0.75) | |||||||
Weighted average Class A common shares outstanding – basic | 22,798,596 | 11,859,955 | |||||||||
Weighted average Class A common shares outstanding - diluted | 44,998,609 | 11,859,955 |
Class A Shares | Class B Shares | Additional Paid- in-Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Non-controlling Interest | Total Equity (Deficit) | |||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2021 | 11,923,941 | $ | 1 | 13,085,488 | $ | 1 | $ | 252,593 | $ | (320,080) | $ | 507 | $ | — | $ | (66,978) | |||||||||||||||||||||||||||||||||||||
Adoption of ASU 2020-06 | — | — | — | — | (12,270) | 8,861 | — | — | (3,409) | ||||||||||||||||||||||||||||||||||||||||||||
Share based compensation | — | — | — | — | 1,926 | — | — | — | 1,926 | ||||||||||||||||||||||||||||||||||||||||||||
P Unit Shares | — | — | 462,572 | — | 6,711 | — | — | — | 6,711 | ||||||||||||||||||||||||||||||||||||||||||||
Business Combination | 12,522,343 | 1 | 13,115,515 | 2 | (35,621) | 120,991 | (507) | 15,048 | 99,914 | ||||||||||||||||||||||||||||||||||||||||||||
Converted shares | 3,359,375 | 1 | (3,359,375) | (1) | (5,135) | — | — | 5,135 | — | ||||||||||||||||||||||||||||||||||||||||||||
Tax receivable agreement liability | — | — | — | — | (34,092) | — | — | — | (34,092) | ||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | (36,420) | — | (68,372) | (104,792) | ||||||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2022 | 27,805,659 | $ | 3 | 23,304,200 | $ | 2 | $ | 174,112 | $ | (226,648) | $ | — | $ | (48,189) | $ | (100,720) |
Preferred Shares | Class A Shares | Class B Shares | Additional Paid- in-Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Total Equity (Deficit) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2020 | 25,000 | $ | 25,000 | 10,989,751 | $ | 1 | 11,173,776 | $ | 1 | $ | 208,322 | $ | (204,086) | $ | 396 | $ | 29,634 | ||||||||||||||||||||||||||||||||||||||||||
Issuance of Common Stock | — | — | 934,190 | — | 683,344 | — | 15,000 | — | — | 15,000 | |||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of Common Stock - non-return | — | — | — | — | — | — | 367 | — | — | 367 | |||||||||||||||||||||||||||||||||||||||||||||||||
Beneficial conversion feature on convertible notes | — | — | — | — | — | — | 16,904 | — | — | 16,904 | |||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions (see Note 4) | — | — | — | — | 1,228,368 | — | 12,000 | — | — | 12,000 | |||||||||||||||||||||||||||||||||||||||||||||||||
Paid in kind preferred unit distribution | — | 5,568 | — | — | — | — | — | (5,568) | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Preferred shares exchanged for convertible notes | (25,000) | (30,568) | — | — | — | — | — | — | — | (30,568) | |||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | — | — | — | 111 | 111 | |||||||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | (110,426) | — | (110,426) | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2021 | — | $ | — | 11,923,941 | $ | 1 | 13,085,488 | $ | 1 | $ | 252,593 | $ | (320,080) | $ | 507 | $ | (66,978) |
For the Years Ended December 31, | |||||||||||
2022 | 2021 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net loss | $ | (104,792) | $ | (110,426) | |||||||
Loss from discontinued operations | — | 8,851 | |||||||||
Adjustments: | |||||||||||
Depreciation and amortization | 58,377 | 52,470 | |||||||||
Accretion of debt discount | — | 11,059 | |||||||||
Impairment loss on long-lived assets | 1,007 | — | |||||||||
Impairment loss on goodwill | 14,160 | 52,487 | |||||||||
Change in fair value of tax receivable agreement liabilities | (19,008) | — | |||||||||
Loss on extinguishment of convertible notes | — | 2,436 | |||||||||
Amortization of debt issuance costs | 5,274 | 4,795 | |||||||||
Change in fair value of contingent consideration, net of accretion | (18,058) | (3,575) | |||||||||
Share-based compensation - stock options | 1,926 | — | |||||||||
Share-based compensation - Class P Units | 6,711 | — | |||||||||
Provision for bad debt expense | 8,533 | 1,867 | |||||||||
Gain on sale of property and equipment | (2,087) | (587) | |||||||||
Other | (730) | — | |||||||||
Changes in assets and liabilities: | |||||||||||
Accounts receivable | (51,652) | (11,638) | |||||||||
Inventories | (3,624) | 514 | |||||||||
Prepaid expenses and other assets | 10,559 | (8,627) | |||||||||
Accounts payable and accrued liabilities | 17,596 | (14,042) | |||||||||
Contract liabilities | 7,273 | (2,595) | |||||||||
Net cash used in operating activities from continuing operations | (68,535) | (17,011) | |||||||||
Net cash used in operating activities from discontinued operations | — | (931) | |||||||||
Net cash used in operating activities | (68,535) | (17,942) | |||||||||
Cash flows from investing activities: | |||||||||||
Purchases of property and equipment | (6,072) | (3,014) | |||||||||
Proceeds from sale of property and equipment | 2,715 | 833 | |||||||||
Acquisition of businesses, net of cash acquired (see Note 4) | — | (45,849) | |||||||||
Net cash used in investing activities from continuing operations | (3,357) | (48,030) | |||||||||
Net cash provided by investing activities from discontinued operations | — | 4,498 | |||||||||
Net cash used in investing activities | (3,357) | (43,532) | |||||||||
Cash flows from financing activities: | |||||||||||
Proceeds from line of credit | 841,210 | 27,796 | |||||||||
Repayment of line of credit | (837,034) | — | |||||||||
Proceeds from convertible notes – related party | — | 5,000 | |||||||||
Repayment of convertible notes – related party | — | (5,000) | |||||||||
Proceeds from convertible notes – June 2021 | — | 44,400 | |||||||||
Proceeds from senior unsecured convertible notes | 124,685 | — | |||||||||
Repayment of long-term debt | (9,564) | (9,564) | |||||||||
Repayment of promissory note | (500) | — | |||||||||
Payments for financing fees | (8,928) | (2,295) | |||||||||
Payments of acquisition related contingent consideration | (34,718) | — | |||||||||
Repayment of capital leases | (15,703) | (9,585) | |||||||||
Proceeds from issuance of common stock - PIPE | 35,915 | — | |||||||||
Proceeds from issuance of equity | — | 15,367 | |||||||||
Payments for equity issuance costs | (24,999) | — | |||||||||
Tax distributions to members | (128) | — | |||||||||
Net cash provided by financing activities from continuing operations | 70,236 | 66,119 | |||||||||
Net cash used in financing activities from discontinued operations | — | (2,746) | |||||||||
Net cash provided by financing activities | 70,236 | 63,373 | |||||||||
Effect of foreign currency exchange rate (translation) on cash | — | 83 | |||||||||
Net increase (decrease) in cash | (1,656) | 1,982 | |||||||||
Cash: | |||||||||||
Beginning of year | 2,151 | 169 | |||||||||
End of year | $ | 495 | $ | 2,151 | |||||||
Balances included in the consolidated balance sheets: | |||||||||||
Cash | $ | 495 | $ | 606 | |||||||
Cash included in current assets of discontinued operations | — | 1,545 | |||||||||
Cash at end of year | $ | 495 | $ | 2,151 | |||||||
Supplemental disclosure of cash flow information: | |||||||||||
Cash paid for: | |||||||||||
Interest from continuing operations | $ | 53,242 | $ | 31,801 | |||||||
Interest from discontinued operations | $ | — | $ | 195 | |||||||
Non-cash investing and financing activities: | |||||||||||
Assets acquired under operating leases from continuing operations | $ | 9,550 | $ | — | |||||||
Assets acquired under financing leases from continuing operations | $ | 16,698 | $ | 9,804 |
For the Year Ended December 31, | |||||||||||||||||||||||
2022 | 2021 | ||||||||||||||||||||||
Amount | % of Total | Amount | % of Total | ||||||||||||||||||||
Customers: | |||||||||||||||||||||||
AT&T | $ | 292,111 | 38.7 | % | $ | 249,389 | 40.7 | % | |||||||||||||||
Verizon | 106,194 | 14.1 | % | 72,584 | 11.9 | % | |||||||||||||||||
T-Mobile | 102,431 | 13.6 | % | 78,442 | 12.8 | % | |||||||||||||||||
Entergy (a) | — | — | % | 69,268 | 11.3 | % | |||||||||||||||||
Total | $ | 500,736 | 66.4 | % | $ | 469,683 | 76.7 | % |
(a) | The company uses a threshold of 10% of total consolidated revenue to determine which customers are significant. Entergy had a balance that was considered significant in 2021 but did not have a balance above the 10% threshold in 2022 and as such was not considered a significant customer in 2022. |
Basic: | |||||
February 14, 2022 through December 31, 2022 | |||||
Numerator: | |||||
Net loss | $ | (75,189) | |||
Less: Loss attributable to non-controlling interests | (38,841) | ||||
Net loss attributable to QualTek Services Inc. | (36,348) | ||||
Less: Loss attributable to participating securities | (3,298) | ||||
Net loss attributable to Class A common shareholders, basic | $ | (33,050) | |||
Denominator: | |||||
Weighted average Class A common shares outstanding | 25,073,531 | ||||
Less: Weighted average unvested Blocker Owner Earnout Shares outstanding | (2,274,935) | ||||
Weighted average Class A common shares outstanding, basic | 22,798,596 | ||||
Net loss per share - basic | $ | (1.45) |
Diluted: | |||||
February 14, 2022 through December 31, 2022 | |||||
Numerator: | |||||
Net loss | $ | (75,189) | |||
Less: Loss attributable to non-controlling interests | (5,906) | ||||
Net loss attributable to QualTek Services, Inc. | (69,283) | ||||
Less: Loss attributable to participating securities | (3,334) | ||||
Net loss attributable to Class A common shareholders, diluted | $ | (65,949) | |||
Denominator: | |||||
Weighted average Class A common shares outstanding | 25,073,531 | ||||
Less: weighted average unvested Blocker Owner Earnout Shares outstanding | (2,274,935) | ||||
Add: weighted average Class B common shares if converted to Class A common | 22,200,013 | ||||
Weighted average Class A commons shares outstanding, diluted | 44,998,609 | ||||
Net loss per share - diluted | $ | (1.47) |
February 14, 2022 through December 31, 2022 | |||||
Excluded from the calculation: | |||||
Stock options | 5,632,011 | ||||
Private Placement Warrants | 101,992 | ||||
Public Warrants | 2,874,979 | ||||
Convertible Notes | 12,468,500 | ||||
Class B common stock | — | ||||
Pre-PIPE Notes | — | ||||
Total potentially dilutive shares excluded from calculation | 21,077,482 |
For the Year Ended December 31, 2021 | |||||
Carrying amounts of assets included as part of discontinued operations: | |||||
Cash | $ | 1,545 | |||
Accounts receivable, net of allowance | 1,292 | ||||
Other current assets | 1,665 | ||||
Total current assets of discontinued operations | $ | 4,502 | |||
Carrying amounts of liabilities included as part of discontinued operations: | |||||
Current portion of long-term debt and financing lease obligations | $ | 14 | |||
Accounts payable | 559 | ||||
Accrued expenses | 1,475 | ||||
Total current liabilities of discontinued operations | $ | 2,048 |
For the Year Ended December 31, 2021 | |||||||||||
Revenue | $ | 5,850 | |||||||||
Costs and expenses: | |||||||||||
Cost of revenues | 9,562 | ||||||||||
General and administrative | 381 | ||||||||||
Depreciation and amortization | 6,798 | ||||||||||
Total costs and expenses | 16,741 | ||||||||||
Loss from operations of discontinued operations | (10,891) | ||||||||||
Other income (expense): | |||||||||||
Gain on sale of property and equipment | 2,235 | ||||||||||
Interest expense | (195) | ||||||||||
Loss from discontinued operations | $ | (8,851) |
FNS | Broken Arrow | Concurrent | Urban Cable | ||||||||||||||||||||
Purchase consideration: | |||||||||||||||||||||||
Cash paid | $ | 20,059 | $ | 5,000 | $ | 13,828 | $ | 8,436 | |||||||||||||||
Rollover equity | 2,000 | — | 6,000 | 4,000 | |||||||||||||||||||
Contingent consideration | 8,200 | 7,552 | 7,000 | 3,450 | |||||||||||||||||||
Acquisition debt | — | — | 14,143 | — | |||||||||||||||||||
Due from seller | — | — | (510) | (151) | |||||||||||||||||||
$ | 30,259 | $ | 12,552 | $ | 40,461 | $ | 15,735 | ||||||||||||||||
Purchase price allocations: | |||||||||||||||||||||||
Cash | $ | — | $ | — | $ | 1,289 | $ | 185 | |||||||||||||||
Accounts receivable | — | 5,126 | 8,458 | 3,695 | |||||||||||||||||||
Inventories | — | 133 | 25 | — | |||||||||||||||||||
Prepaid expenses | — | 94 | — | 14 | |||||||||||||||||||
Other current assets | — | — | 10 | 28 | |||||||||||||||||||
Property and equipment | 9,978 | 219 | 5,263 | 1,361 | |||||||||||||||||||
Other long-term assets | — | 32 | 60 | — | |||||||||||||||||||
Customer relationships | 17,370 | 5,750 | 22,330 | 10,910 | |||||||||||||||||||
Trademarks and trade names | 270 | 80 | 760 | 340 | |||||||||||||||||||
Goodwill | 8,082 | 5,319 | 8,552 | 799 | |||||||||||||||||||
35,700 | 16,753 | 46,747 | 17,332 | ||||||||||||||||||||
Accounts payable | — | (1,987) | (1,938) | (1,184) | |||||||||||||||||||
Accrued expenses | — | (156) | (799) | (323) | |||||||||||||||||||
Contract liabilities | — | (2,058) | (367) | — | |||||||||||||||||||
Lease obligations | (5,441) | — | (3,182) | (90) | |||||||||||||||||||
$ | 30,259 | $ | 12,552 | $ | 40,461 | $ | 15,735 |
December 31, | |||||||||||
2022 | 2021 | ||||||||||
Office furniture | $ | 2,229 | $ | 1,382 | |||||||
Computers | 2,296 | 1,856 | |||||||||
Machinery, equipment and vehicles | 27,178 | 17,331 | |||||||||
Land | 140 | 140 | |||||||||
Building | 340 | 340 | |||||||||
Leasehold improvements | 5,178 | 4,552 | |||||||||
Software | 2,416 | 2,320 | |||||||||
Assets under financing lease | 57,905 | 50,941 | |||||||||
Construction in process | 1,807 | 1,335 | |||||||||
99,489 | 80,197 | ||||||||||
Less: accumulated depreciation | (39,671) | (29,515) | |||||||||
Property and equipment, net | $ | 59,818 | $ | 50,682 |
December 31, | |||||||||||||||||||||||
2022 | 2021 | ||||||||||||||||||||||
Amounts | % of Total | Amounts | % of Total | ||||||||||||||||||||
AT&T | $ | 76,816 | 30.7 | % | $ | 56,280 | 27.1 | % | |||||||||||||||
Verizon | 56,551 | 22.6 | % | 50,218 | 24.2 | % | |||||||||||||||||
T-Mobile | 36,663 | 14.6 | % | 35,756 | 17.2 | % | |||||||||||||||||
Total | $ | 170,030 | 67.9 | % | $ | 142,254 | 68.5 | % |
December 31, | |||||||||||
2022 | 2021 | ||||||||||
Balance at beginning of year | $ | 5,614 | $ | 3,933 | |||||||
Charged to expense | 8,533 | 1,867 | |||||||||
Deductions for uncollectible receivables written off | (8,739) | (186) | |||||||||
Balance at end of year | $ | 5,408 | $ | 5,614 |
Renewables and Recovery Logistics | Telecom | Total | |||||||||||||||
Goodwill as of January 1, 2021 | $ | 13,598 | $ | 44,924 | $ | 58,522 | |||||||||||
Additions from acquisitions (Note 4) | 8,082 | 14,606 | 22,688 | ||||||||||||||
Impairment loss | — | (52,487) | (52,487) | ||||||||||||||
Goodwill as of December 31, 2021 (a) | $ | 21,680 | $ | 7,043 | $ | 28,723 | |||||||||||
Impairment loss | (8,082) | (6,078) | (14,160) | ||||||||||||||
Measurement period adjustments, net | — | (70) | (70) | ||||||||||||||
Goodwill as of December 31, 2022 (a) | $ | 13,598 | $ | 895 | $ | 14,493 |
(a) | The Company accumulated impairment charges of $6,078 thousand and $52,487 thousand at December 31, 2022 and 2021 in the Telecom segment. We recognized $8,082 thousand of accumulated impairment charges at December 31, 2022 within the Renewables and Recovery Logistics segment. |
December 31, 2022 | |||||||||||||||||||||||
Weighted Average Remaining Useful Life | Gross carrying amount | Accumulated amortization | Net carrying amount | ||||||||||||||||||||
Customer relationships | 8.8 | $ | 424,260 | $ | (133,535) | $ | 290,725 | ||||||||||||||||
Trademarks and trade names | 9.3 | 59,969 | (29,008) | 30,961 | |||||||||||||||||||
$ | 484,229 | $ | (162,543) | $ | 321,686 |
December 31, 2021 | |||||||||||||||||||||||
Weighted Average Remaining Useful Life | Gross carrying amount | Accumulated amortization | Net carrying amount | ||||||||||||||||||||
Customer relationships | 9.5 | $ | 424,560 | $ | (98,307) | $ | 326,253 | ||||||||||||||||
Trademarks and trade names | 9.5 | 59,969 | (22,048) | 37,921 | |||||||||||||||||||
$ | 484,529 | $ | (120,355) | $ | 364,174 |
Years ending December 31: | |||||
2023 | $ | 40,827 | |||
2024 | 38,778 | ||||
2025 | 37,786 | ||||
2026 | 37,087 | ||||
2027 | 35,522 | ||||
Thereafter | 131,686 | ||||
$ | 321,686 |
December 31, | |||||||||||
Current Maturities: | 2022 | 2021 | |||||||||
Current maturities of long-term debt, net of deferred financing costs (1)(2) | $ | 543,404 | $ | 115,224 | |||||||
Current portion of financing lease obligations | 13,022 | 12,151 | |||||||||
Current portion of long-term debt and financing lease obligations, net of deferred financing costs | $ | 556,426 | $ | 127,375 | |||||||
Long-term borrowings: | |||||||||||
Line of credit | $ | — | $ | 87,633 | |||||||
Term loan | — | 351,481 | |||||||||
Acquisition debt | — | 34,718 | |||||||||
Convertible notes – related party | — | 30,567 | |||||||||
Convertible notes – June 2021 | — | 44,400 | |||||||||
Less: current maturities of long-term debt | — | (115,224) | |||||||||
Less: unamortized financing fees | — | (11,354) | |||||||||
Less: convertible debt discount | — | (3,408) | |||||||||
Long-term debt, net of current portion | $ | — | $ | 418,813 | |||||||
Lease obligations: | |||||||||||
Financing lease obligations | $ | 35,897 | $ | 32,002 | |||||||
Less: current portion of financing lease obligations | (13,022) | (12,151) | |||||||||
Lease obligations, net of current portion | 22,875 | 19,851 | |||||||||
Total long-term borrowings | $ | 22,875 | $ | 438,664 |
(1) | The current maturities of long-term debt, net of deferred financing costs and convertible debt discount, consist of the Line of Credit of $91,665 thousand, the Term Loan of $334,378 thousand, the 2027 Convertible Notes of $117,361 thousand. | ||||
(2) | The current maturities of long-term debt for the years ended December 31, 2022 and December 31, 2021 is net of deferred financing costs and convertible debt discount of $15,007 thousand and $4,024 thousand, respectively. |
Line of credit | Term loan | Convertible notes | Finance Lease obligations | Total | |||||||||||||||||||||||||||||||
2023 | $ | 91,809 | $ | 341,917 | $ | 124,685 | $ | 13,022 | $ | 571,433 | |||||||||||||||||||||||||
2024 | — | — | — | 10,442 | 10,442 | ||||||||||||||||||||||||||||||
2025 | — | — | — | 7,762 | 7,762 | ||||||||||||||||||||||||||||||
2026 | — | — | — | 4,383 | 4,383 | ||||||||||||||||||||||||||||||
2027 | — | — | — | 288 | 288 | ||||||||||||||||||||||||||||||
Thereafter | — | — | — | — | — | ||||||||||||||||||||||||||||||
Total | $ | 91,809 | $ | 341,917 | $ | 124,685 | $ | 35,897 | $ | 594,308 |
Level 1 | Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Active markets are considered to be those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis. |
Level 2 | Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability. This category includes quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in inactive markets. |
Level 3 | Unobservable inputs are not corroborated by market data. This category is comprised of financial and non-financial assets and liabilities whose fair value is estimated based on internally developed models or methodologies using significant inputs that are generally less readily observable from objective sources. |
Fair Value at December 31, 2022 | |||||||||||||||||||||||
Carrying Value | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
Financial liabilities | |||||||||||||||||||||||
Contingent consideration (1) | $ | 5,200 | $ | — | $ | — | $ | 5,200 | |||||||||||||||
Warrant liability (1) | 77 | — | — | 77 | |||||||||||||||||||
$ | 5,277 | $ | — | $ | — | $ | 5,277 |
Fair Value at December 31, 2021 | |||||||||||||||||||||||
Carrying Value | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
Financial liabilities | |||||||||||||||||||||||
Contingent consideration | $ | 30,756 | $ | — | $ | — | $ | 30,756 | |||||||||||||||
$ | 30,756 | $ | — | $ | — | $ | 30,756 |
Warrant liability | Contingent consideration | ||||||||||
January 1, 2021 | $ | — | $ | 18,129 | |||||||
Acquisitions (see Note 4) | — | 26,202 | |||||||||
Accretion | — | 1,205 | |||||||||
Change in fair value | — | (4,780) | |||||||||
Reclassification to acquisition debt | — | (10,000) | |||||||||
December 31, 2021 | — | 30,756 | |||||||||
Assumption of private placement warrants in Business Combination | 77 | — | |||||||||
Accretion | — | 1,440 | |||||||||
Reclassification to short term debt | — | (7,498) | |||||||||
Change in fair value | — | (19,498) | |||||||||
December 31, 2022 | $ | 77 | $ | 5,200 |
Common Units | Ownership Percentage | ||||||||||
Common Units held by QualTek Services Inc. (1) | 25,530,724 | 52 | % | ||||||||
Common Units held by Flow-through Sellers | 23,304,200 | 48 | % | ||||||||
Balance at end of period | 48,834,924 | 100 | % |
(1) | Earnouts related to QualTek Services Inc are contingently issuable shares where the underlying units are not issued, and as such the earnout amount is not included in the calculation of NCI. |
Options | Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | Aggregate Intrinsic Value ($000) | ||||||||||||||||||||||
Outstanding at January 1, 2022 | — | — | ||||||||||||||||||||||||
Granted | 6,831,789 | $6.20 | ||||||||||||||||||||||||
Exercised | — | — | ||||||||||||||||||||||||
Forfeited or expired | (1,172,154) | $7.50 | ||||||||||||||||||||||||
Cancelled | (27,625) | $7.50 | ||||||||||||||||||||||||
Outstanding at December 31, 2022 | 5,632,010 | $5.92 | 5.62 | — | ||||||||||||||||||||||
Exercisable at December 31, 2022 | 718,404 | $7.50 | 5.50 | — |
Black-Scholes inputs | |||||
Expected term (in years) | 5.71 | ||||
Annualized volatility | 157.5 | % | |||
Risk-free-rate | 3.7 | % | |||
Expected dividends | — | % |
For the Year Ended | |||||
December 31, 2022 | |||||
Cost of revenue | $ | 214 | |||
General and administrative expenses | 1,712 | ||||
Total | $ | 1,926 |
Unrecognized Compensation Cost | Weighted Average Remaining Period to be Recognized (in Years) | ||||||||||
December 31, 2022 | December 31, 2022 | ||||||||||
Stock options | $ | 4,820 | 3.0 |
Total Unrecognized Compensation Cost | |||||||||||||||||||||||||||||
Total | 2023 | 2024 | 2025 | 2026 and beyond | |||||||||||||||||||||||||
Stock options | $ | 4,820 | $ | 1,668 | $ | 1,485 | $ | 1,429 | $ | 238 |
For the Year Ended | ||||||||||||||
December 31, 2022 | December 31, 2021 | |||||||||||||
Deferred income tax assets: | ||||||||||||||
Tax receivable agreement | $ | — | $ | — | ||||||||||
Partnership outside basis difference | 28,023 | — | ||||||||||||
Net operating losses and other tax attributes | 33,194 | 12,756 | ||||||||||||
Gross deferred tax assets | 61,217 | 12,756 | ||||||||||||
Valuation allowance | (61,217) | (12,756) | ||||||||||||
Deferred tax assets, net of valuation allowance | $ | — | $ | — |
December 31, 2022 | December 31, 2021 | |||||||||||||||||||||||||
Federal income tax expense at statutory rate | $ | 22,006 | 21.0 | % | $ | 23,189 | 21.0 | % | ||||||||||||||||||
State income tax, net of federal benefit | 4,035 | 3.9 | % | 5,172 | 4.7 | % | ||||||||||||||||||||
Gain or reduction of TRA liability | 3,992 | 3.8 | % | — | — | % | ||||||||||||||||||||
Permanent differences | (407) | (0.4) | % | — | — | % | ||||||||||||||||||||
Non-controlling interest | (17,503) | (16.7) | % | (28,361) | (25.7) | % | ||||||||||||||||||||
Valuation allowance | (12,123) | (11.6) | % | — | — | % | ||||||||||||||||||||
Effective income tax rate | $ | — | $ | — | $ | — | $ | — |
For the Years Ended December 31, | |||||||||||
2022 | 2021 | ||||||||||
Revenue: | |||||||||||
Telecom | $ | 665,511 | $ | 498,221 | |||||||
Renewables and Recovery Logistics | 88,345 | 114,020 | |||||||||
Total consolidated revenue | $ | 753,856 | $ | 612,241 |
December 31, | |||||||||||
2022 | 2021 | ||||||||||
Total Assets: | |||||||||||
Telecom | $ | 607,975 | $ | 570,750 | |||||||
Renewables and Recovery Logistics | 67,953 | 90,638 | |||||||||
Corporate (1) | 12,999 | 10,371 | |||||||||
Total consolidated assets | $ | 688,927 | $ | 671,759 |
For the Years Ended December 31, | |||||||||||
2022 | 2021 | ||||||||||
Capital Expenditures: | |||||||||||
Telecom | $ | 19,221 | $ | 11,109 | |||||||
Renewables and Recovery Logistics | 3,020 | 330 | |||||||||
Corporate | 529 | 1,379 | |||||||||
Total consolidated capital expenditures (1) | $ | 22,770 | $ | 12,818 |
For the Years Ended December 31, | |||||||||||
2022 | 2021 | ||||||||||
EBITDA: | |||||||||||
Telecom | $ | 22,374 | $ | (19,729) | |||||||
Renewables and Recovery Logistics | 24,738 | 46,359 | |||||||||
Corporate | (34,210) | (25,258) | |||||||||
Consolidated EBITDA | $ | 12,902 | $ | 1,372 | |||||||
EBITDA Reconciliation: | |||||||||||
Loss on Continuing Operations | $ | (104,792) | $ | (101,575) | |||||||
Plus: | |||||||||||
Interest expense | 59,317 | 50,477 | |||||||||
Depreciation | 16,190 | 13,017 | |||||||||
Amortization | 42,187 | 39,453 | |||||||||
Total consolidated EBITDA | $ | 12,902 | $ | 1,372 |
For the Years Ended December 31, | |||||||||||
2022 | 2021 | ||||||||||
Amortization and Depreciation: | |||||||||||
Amortization and depreciation | |||||||||||
Telecom | $ | 46,321 | $ | 41,105 | |||||||
Renewables and Recovery Logistics | 11,208 | 10,383 | |||||||||
Corporate | 848 | 982 | |||||||||
Total consolidated amortization and depreciation | $ | 58,377 | $ | 52,470 |
For the Years Ended December 31, | |||||||||||
Interest Expense: | 2022 | 2021 | |||||||||
Telecom | 4,179 | 1,711 | |||||||||
Renewables and Recovery Logistics | 1,285 | 818 | |||||||||
Corporate | 53,853 | 47,948 | |||||||||
Total consolidated interest expense | 59,317 | 50,477 |
For the Year Ended December 31, | |||||
2022 | |||||
Assets | |||||
Operating leases | $ | 28,566 | |||
Finance leases, net | 42,809 | ||||
Total lease assets | $ | 71,375 | |||
Liabilities | |||||
Current: | |||||
Operating leases | $ | 9,594 | |||
Finance leases | 13,022 | ||||
Non-current: | |||||
Operating leases | 22,491 | ||||
Finance leases | 22,875 | ||||
Total lease liabilities | $ | 67,982 |
For the Year Ended December 31, | |||||
2022 | |||||
Operating lease cost | $ | 11,955 | |||
Finance lease cost: | |||||
Amortization of right-of-use asset | 9,270 | ||||
Interest on lease liabilities | 2,429 | ||||
Variable lease cost | 1,751 | ||||
Sublease income | (162) | ||||
Total lease cost | $ | 25,243 |
For the Year Ended December 31, | |||||
2022 | |||||
Cash paid for amounts included in the measurement of lease liabilities: | |||||
Operating cash flows from operating leases | $ | 11,108 | |||
Operating cash flows from finance leases | $ | 2,429 | |||
Financing cash flows from finance leases | $ | 15,703 | |||
Weighted average remaining lease term (in years): | |||||
Operating leases | 4.03 | ||||
Finance leases | 2.42 | ||||
Weighted average discount rate: | |||||
Operating leases | 6 | % | |||
Finance leases | 7 | % |
Operating Leases | Finance Leases | ||||||||||
2023 | $ | 11,108 | $ | 14,825 | |||||||
2024 | 8,893 | 11,584 | |||||||||
2025 | 6,029 | 8,282 | |||||||||
2026 | 4,276 | 4,518 | |||||||||
2027 | 2,189 | 393 | |||||||||
Thereafter | 4,056 | — | |||||||||
Total future undiscounted lease payments | 36,551 | 39,602 | |||||||||
Less: imputed interest | (4,466) | (3,705) | |||||||||
Total reported lease liability | $ | 32,085 | $ | 35,897 |
Exhibit | Description | |||||||
2.1 † | ||||||||
2.2 † | ||||||||
3.1 | ||||||||
3.2 | ||||||||
4.1 | ||||||||
10.1 | Amendment to Term Credit and Guaranty Agreement, dated March 16, 2023, by and among QualTek Buyer, LLC, QualTek LLC, certain subsidiaries of QualTek LLC and Citibank, N.A., as administrative agent and collateral agent. (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on March 16, 2023) | |||||||
10.2 | Amendment to ABL Credit and Guaranty Agreement, dated March 16, 2023, by and among QualTek Buyer, LLC, QualTek LLC, certain subsidiaries of QualTek LLC and PNC Bank, National Association, as administrative agent and collateral agent. (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed on March 16, 2023) | |||||||
10.3 | ||||||||
10.4 | ||||||||
10.5 |
10.6# | ||||||||
10.7# | ||||||||
10.8# | ||||||||
10.9# | ||||||||
10.10# | ||||||||
10.11 | ||||||||
10.11 | ||||||||
10.12* | ||||||||
10.13* | ||||||||
14.1 | ||||||||
16.1 | ||||||||
21.1 | List of subsidiaries of QualTek Services Inc. (incorporated by reference to Exhibit 21.1 of the Company’s Annual Report on Form 10-K filed on April 28, 2023) | |||||||
23.1* | ||||||||
31.1* |
31.2* | ||||||||
32.1* | ||||||||
101.INS* | Inline XBRL Instance Document | |||||||
101.SCH* | Inline XBRL Taxonomy Extension Schema Document | |||||||
101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | |||||||
101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document | |||||||
101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
104 | Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit) |
QUALTEK SERVICES INC. | ||||||||
Date: May 1, 2023 | By: | /s/ Christopher S. Hisey | ||||||
Name: Christopher S. Hisey | ||||||||
Title: Chief Executive Officer and Director | ||||||||
Date: May 1, 2023 | By: | /s/ Matthew J. McColgan | ||||||
Name: Matthew J. McColgan | ||||||||
Title: Chief Financial Officer |
(Incorporating First Amendment dated October 12, 2018,
Eighth Amendment dated September 19, 2022
Tenth Amendment dated December 23, 2022)
SECTION 1. DEFINITIONS AND INTERPRETATION | |||||
1.1. Definitions | |||||
1.2. Accounting Terms; Pro Forma Calculations; Limited Condition Transactions | |||||
1.3. Interpretation, Etc | |||||
1.4. Currency Translation; Calculations of Amounts | |||||
1.5. Classification of Loans and Borrowings | |||||
1.6. Effectuation of Transactions | |||||
1.7. Cashless Rollovers | |||||
SECTION 2. LOANS | |||||
2.1. Loans | |||||
2.2. Protective Advances | |||||
2.3. Swing Line Loans | |||||
2.4. Letters of Credit | |||||
2.5. Pro Rata Shares; Obligations Several; Availability of Funds | |||||
2.6. Use of Proceeds | |||||
2.7. Evidence of Debt; Register; Notes | |||||
2.8. Interest on Loans and Letter of Credit Disbursements | |||||
2.9. Conversion/Continuation | |||||
2.10. Default Interest | |||||
2.11. Fees | |||||
2.12. Repayment of Loans | |||||
2.13. Voluntary Prepayments/Commitment Reductions | |||||
2.14. Mandatory Prepayments | |||||
2.15. Out-of-Formula Loans | |||||
2.16. General Provisions Regarding Payments | |||||
2.17. Ratable Sharing | |||||
2.18. Making or Maintaining BSBY Rate Loans | |||||
2.19. Increased Costs; Capital Adequacy | |||||
2.20. Taxes; Withholding, Etc | |||||
2.21. Obligation to Mitigate | |||||
2.22. Defaulting Lenders | |||||
2.23. Replacement and Termination of Lenders | |||||
2.24. Incremental Revolving Commitments | |||||
2.25. Extension Offers | |||||
2.26. Refinancing Revolving Facilities | |||||
SECTION 3. CONDITIONS PRECEDENT | |||||
3.1. Closing Date | |||||
3.2. Each Credit Extension After the Closing Date | |||||
SECTION 4. REPRESENTATIONS AND WARRANTIES |
4.1. Organization; Requisite Power and Authority; Qualification | |||||
4.2. Equity Interests and Ownership | |||||
4.3. Due Authorization | |||||
4.4. No Conflict | |||||
4.5. Governmental Approvals | |||||
4.6. Binding Obligation | |||||
4.7. Historical Financial Statements; Pro Forma Financial Statements | |||||
4.8. No Material Adverse Change | |||||
4.9. Adverse Proceedings | |||||
4.10. Payment of Taxes | |||||
4.11. Properties | |||||
4.12. Environmental Matters | |||||
4.13. Borrowing Base Certificate | |||||
4.14. Governmental Regulation | |||||
4.15. Federal Reserve Regulations | |||||
4.16. Employee Matters | |||||
4.17. Employee Benefit Plans | |||||
4.18. Solvency | |||||
4.19. Compliance with Laws | |||||
4.20. Disclosure | |||||
4.21. Collateral Matters | |||||
4.22. Insurance | |||||
4.23. Sanctioned Persons; Anti-Corruption Laws; PATRIOT Act | |||||
SECTION 5. AFFIRMATIVE COVENANTS | |||||
5.1. Financial Statements and Other Reports | |||||
5.2. Existence | |||||
5.3. Payment of Taxes and Claims | |||||
5.4. Maintenance of Properties | |||||
5.5. Insurance | |||||
5.6. Books and Records; Inspections | |||||
5.7. Use of Proceeds | |||||
5.8. Compliance with Laws | |||||
5.9. Environmental Matters | |||||
5.10. Subsidiaries | |||||
5.11. Additional Collateral | |||||
5.12. Further Assurances | |||||
5.13. Field Examinations and Inventory Appraisals | |||||
5.14. Senior Indebtedness | |||||
5.15. Post-Closing Matters | |||||
5.16. Representation and Warranty Insurance Proceeds | |||||
5.17. Cash Management Systems. |
SECTION 6. NEGATIVE COVENANTS | |||||
6.1. Indebtedness | |||||
6.2. Liens | |||||
6.3. No Further Negative Pledges | |||||
6.4. Restricted Junior Payments | |||||
6.5. Restrictions on Subsidiary Distributions | |||||
6.6. Investments | |||||
6.7. Fixed Charge Coverage Ratio | 188 | ||||
6.8. Fundamental Changes; Disposition of Assets; Equity Interests of Subsidiaries | |||||
6.9. Sales and Leasebacks | |||||
6.10. Transactions with Affiliates | |||||
6.11. Conduct of Business | |||||
6.12. Hedge Agreements | |||||
6.13. Amendments or Waivers of Organizational Documents and Certain Agreements | |||||
6.14. Fiscal Year | |||||
6.15. Holding Company | |||||
SECTION 7. GUARANTEE | |||||
7.1. Guarantee of the Obligations | |||||
7.2. Indemnity by Holdings and the Borrower; Contribution by the Guarantors | |||||
7.3. Liability of Guarantors Absolute | |||||
7.4. Waivers by the Guarantors | |||||
7.5. Guarantors’ Rights of Subrogation, Contribution, Etc | |||||
7.6. Continuing Guarantee | |||||
7.7. Authority of the Guarantors or the Borrower | |||||
7.8. Financial Condition of the Credit Parties | |||||
7.9. Bankruptcy, Etc | |||||
SECTION 8. EVENTS OF DEFAULT | |||||
8.1. Events of Default | |||||
8.2. Permitted Holders’ Right to Cure | |||||
SECTION 9. AGENTS | |||||
9.1. Appointment of Agents | |||||
9.2. Powers and Duties | |||||
9.3. General Immunity | |||||
9.4. Agents Entitled to Act in Individual Capacity | |||||
9.5. Lenders’ and Issuing Banks’ Representations, Warranties and Acknowledgments | |||||
9.6. Right to Indemnity | |||||
9.7. Successor Administrative Agent and Collateral Agent | |||||
9.8. Collateral Documents and Obligations Guarantee | |||||
9.9. Withholding Taxes | |||||
9.10. Administrative Agent May File Bankruptcy Disclosure and Proofs of Claim | |||||
9.11. ERISA Representation |
SECTION 10. MISCELLANEOUS | |||||
10.1. Notices | |||||
10.2. Expenses | |||||
10.3. Indemnity | |||||
10.4. Set-Off | |||||
10.5. Amendments and Waivers | |||||
10.6. Successors and Assigns; Participations | |||||
10.7. Independence of Covenants | |||||
10.8. Survival of Representations, Warranties and Agreements | |||||
10.9. No Waiver; Remedies Cumulative | |||||
10.10. Marshalling; Payments Set Aside | |||||
10.11. Severability | |||||
10.12. Independent Nature of Lenders’ Rights | |||||
10.13. Headings | |||||
10.14. APPLICABLE LAW | |||||
10.15. CONSENT TO JURISDICTION | |||||
10.16. WAIVER OF JURY TRIAL | |||||
10.17. Confidentiality | |||||
10.18. Usury Savings Clause | |||||
10.19. Counterparts | |||||
10.20. Effectiveness; Entire Agreement | |||||
10.21. PATRIOT Act | |||||
10.22. Electronic Execution of Assignments and Certain Other Documents | |||||
10.23. No Fiduciary Duty | |||||
10.24. Permitted Intercreditor Agreements | |||||
10.25. Acknowledgment and Consent to Bail-In of EEA Financial Institutions | |||||
10.26. Acknowledgement Regarding Any Supported QFCs |
Category | Quarterly Average Facility Utilization | Applicable Commitment Fee Rate | ||||||
Category 1 | ≥ 50% | 0.25% | ||||||
Category 2 | < 50% | 0.375% |
Available Tenor | Benchmark Replacement Adjustment* | ||||
One-Month | 0.11448% (11.448 basis points) | ||||
Six-Months | 0.42826% (42.826 basis points) | ||||
Three-Months | 0.26161% (26.161 basis points) | ||||
•* These values represent the ARRC/ISDA recommended spread adjustment values available here: https://assets.bbhub.io/professional/sites/10/IBOR-Fallbacks-LIBOR-Cessation_Announcement_20210305.pdf |
Fiscal Quarter End | Minimum Consolidated Adjusted EBITDA | ||||
December 31, 2022 | $38,248,000 | ||||
March 31, 2023 | $40,671,000 | ||||
June 30, 2023 | $47,042,000 | ||||
September 30, 2023 | $58,365,000 | ||||
December 31, 2023 | $80,789,000 |
BCP QUALTEK MERGER SUB, LLC, as Borrower | |||||
By: | ________________________________ | ||||
Name: | |||||
Title: |
After giving effect to the Merger, QualTek USA, LLC hereby absolutely, irrevocably and unconditionally assumes all obligations of BCP QualTek Merger Sub, LLC under this Agreement. QUALTEK USA, LLC, as Borrower | |||||
By: | ________________________________ | ||||
Name: | |||||
Title: | |||||
BCP QUALTEK BUYER, LLC, as Guarantor | |||||
By: | ________________________________ | ||||
Name: | |||||
Title: |
QUALTEK MIDCO, LLC QUALTEK MANAGEMENT, LLC NX UTILITIES, LLC EMPIRE TELECOM USA, LLC QUALSAT, LLC ADVANTEK ELECTRICAL CONSTRUCTION, LLC VELOCITEL, LLC SITE SAFE, LLC NX UTILITIES ULC, each as Guarantors | |||||
By: | ________________________________ | ||||
Name: | |||||
Title: |
PNC BANK, NATIONAL ASSOCIATION, as Administrative Agent, Collateral Agent, Swing Line Lender, Issuing Bank and Lender, | |||||
By: | |||||
Name: Sara V. Traberman Title: Senior Vice President |
May 1, 2023 | /s/ Christopher S. Hisey | |||||||
Christopher S. Hisey | ||||||||
Chief Executive Officer |
May 1, 2023 | /s/ Matthew J. McColgan | |||||||
Matthew J. McColgan | ||||||||
Chief Financial Officer |
Date: May 1, 2023 | /s/ Christopher S. Hisey | ||||||||||
Christopher S. Hisey | |||||||||||
Chief Executive Officer | |||||||||||
Date: May 1, 2023 | /s/ Matthew J. McColgan | ||||||||||
Matthew J. McColgan | |||||||||||
Chief Financial Officer |