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INFRASTRUCTURE AND ENERGY ALTERNATIVES, INC.

(IEA)
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INFRASTRUCTURE & ENERGY ALTERNATIVES, INC. : Other Events (form 8-K)

09/30/2022 | 04:44pm EST
Item 8.01 Other Events



On July 24, 2022, Infrastructure and Energy Alternatives, Inc., a Delaware
corporation ("IEA" or the "Company"), entered into an Agreement and Plan of
Merger (the "Merger Agreement") by and among the Company, MasTec, Inc., a
Florida corporation ("MasTec" or "Parent"), and Indigo Acquisition I Corp., a
Delaware corporation and wholly owned subsidiary of Parent ("Merger Sub").
Pursuant to the Merger Agreement, on the terms and subject to the conditions set
forth therein, Merger Sub will merge with and into the Company (the "Merger"),
with the Company continuing as the surviving corporation in the Merger and
becoming a wholly owned subsidiary of Parent.



On August 29, 2022, Parent filed with the U.S. Securities and Exchange
Commission ("SEC") a registration statement on Form S-4 (the "Registration
Statement") which included a proxy statement/prospectus with respect to the
special meeting of the Company stockholders scheduled to be held on October 7,
2022 to, among other things, vote on a proposal to adopt and approve the Merger
Agreement. The Registration Statement was declared effective by the SEC on
September 8, 2022, and the definitive proxy statement/prospectus was filed with
the SEC on September 8, 2022 (the "Definitive Proxy Statement/Prospectus").

Threatened Stockholder Litigation




Between September 8, 2022 and September 30, 2022, 2022, the Company received
four letters on behalf of purported stockholders of the Company generally
alleging concerns regarding the disclosures in the Definitive Proxy
Statement/Prospectus (the "Demand Letters"). In these Demand Letters, these
purported stockholders threaten litigation regarding the alleged deficient
disclosures. No litigation relating to Definitive Proxy Statement/Prospectus or
the Merger Agreement has been filed as of the filing of this Current Report
on
Form 8-K.



Although the Company believes that the disclosures set forth in the Definitive
Proxy Statement/Prospectus comply fully with all applicable law and denies the
allegations in the Demand Letters, in order to moot the disclosure claims, avoid
nuisance and possible expense and business delays, and provide additional
information to its stockholders, the Company has determined voluntarily to
supplement certain disclosures in the Definitive Proxy Statement/Prospectus
related to the claims with the supplemental disclosures set forth below (the
"Supplemental Disclosures"). These Supplemental Disclosures should be read in
conjunction with the rest of the Definitive Proxy Statement/Prospectus, which is
available at the SEC's website, www.sec.gov and which we urge you to read in its
entirety. Nothing in the Supplemental Disclosures shall be deemed an admission
of the legal merit, necessity or materiality under applicable laws of any of the
disclosures set forth herein. To the contrary, the Company and its directors and
officers specifically deny all allegations in the Demand Letters, including the
allegations that any additional disclosure was or is required or material.



To the extent that the information set forth herein differs from or updates
information contained in the Definitive Proxy Statement/Prospectus, the
information set forth herein shall supersede or supplement the information in
the Definitive Proxy Statement. All references to sections and subsections
herein are references to the corresponding sections or subsections in the
Definitive Proxy Statement/Prospectus, all page references are to pages in the
Definitive Proxy Statement/Prospectus, and terms used herein, unless otherwise
defined, have the meanings set forth in the Definitive Proxy
Statement/Prospectus.



1. The disclosure under the heading "Transaction Summary - Opinion of IEA's

Financial Advisor - Summary of Lazard Financial Analyses - Selected Comparable

Company Multiples Analysis" is hereby amended by adding the following to the

    table titled "Specialty E&C Companies" following the last sentence on page 56:




Specialty E&C Companies:



                                     Enterprise Value      2022E EBITDA      2023E EBITDA
                                        (Millions)           Multiple          Multiple
Dycom Industries, Inc.              $            3,614             11.2x              8.5x
MasTec, Inc.                        $            7,320              8.7x              6.9x
MYR Group, Inc.                     $            1,607              9.0x              8.3x
Primoris Services Corporation(1)    $            2,147              6.5x   
          5.8x
Quanta Services, Inc.               $           23,239             14.3x             13.2x









2. The disclosure under the heading "Transaction Summary - Opinion of IEA's

Financial Advisor - Summary of Lazard Financial Analyses - Selected Comparable

Company Multiples Analysis" is hereby amended by adding the following to the

table titled "Specialty Civil E&C Companies" following the last sentence on

    page 56:



Specialty Civil E&C Companies:



                                 Enterprise Value       2022E EBITDA       2023E EBITDA
                                    (Millions)            Multiple           Multiple
Granite Construction Inc.       $            1,292               6.0x               5.0x
Sterling Infrastructure, Inc.   $            1,073               5.5x      
        4.9x
Tutor Perini Corporation        $            1,077               4.4x               3.4x



3. The disclosure under the heading "Transaction Summary - Opinion of IEA's

Financial Advisor - Summary of Lazard Financial Analyses - Selected Precedent

Transactions Multiples Analysis" is hereby amended by adding the following to

    the table after the first sentence on page 58:




                                                                                 Implied
                                                                                Enterprise
                                                                                  Value               FY+1
Announcement Date             Acquiror                       Target             (Millions)          Multiple
      2020          Oaktree Capital Management LP      Signal Energy, LLC  
             NA (1)            NA (1)
    May 2021             Confidential Buyer           Confidential Target      $        371              6.7x
 September 2021          Confidential Buyer           Confidential Target      $        740 (2)          7.3x (2)

October 2021 Quanta Services, Inc. Blattner Holding Company $ 2,700 (2) 10.0x (2)

  December 2021            Koch Industries                DEPCOM Power                   NA (1)            NA (1)






 (1) Not publicly disclosed.


(2) Excludes any contingent earnout consideration.

4. The disclosure under the heading "Transaction Summary - Opinion of IEA's

Financial Advisor - Summary of Lazard Financial Analyses - Discounted Cash

Flow Analysis" is hereby amended by replacing the second and third paragraphs

    on page 59 with the following:



The terminal value of IEA was calculated by applying various terminal year
Adjusted EBITDA multiples ranging from 6.25x to 8.25x to IEA's projected
terminal year Adjusted EBITDA of $215 million. IEA's projected terminal year
Adjusted EBITDA was calculated by assuming from 2027 onwards a 2.25% EBITDA
growth rate? a 2.25% growth rate for depreciation and amortization, change in
net working capital and capital expenditures? and flat proceeds from the sale of
property, plants and equipment and from stock-based compensation. The terminal
year EBITDA multiples were selected by Lazard using its professional judgment
and expertise by reference to historic and current EBITDA multiples of IEA
comparable companies. The 2022 estimated EBITDA multiples and 2023 estimated
EBITDA multiples of IEA comparable companies are set forth above in "- Selected
Comparable Company Multiples Analysis." The resulting range of implied present
values of the enterpriseterminal values for IEA of $657 million to $961 million
was calculated based on estimated Adjusted EBITDA multiples for the next
twelve-month period (referred to as "NTM"), calculated as a weighted average of
the 2022 estimated EBITDA multiples (weighted 25%) and 2023 estimated EBITDA
multiples (weighted 75%) of IEA comparable companies.



Lazard took the sum of the present value ranges for IEA's future cash flows and
terminal value to calculate a range of implied enterprise values. Lazard then
subtracted the net debt of IEA of approximately $302 million (as described in
further detail above in the paragraph immediately preceding "- Summary of Lazard
Financial Analyses") and calculated a range of implied per share equity values
for IEA common stock. Based on that analysis, Lazard reviewed the implied price
per share range for shares of IEA common stock as compared to the per share
merger consideration as set forth below:

5. The disclosure under the heading "Transaction Summary - Opinion of IEA's

Financial Advisor - Miscellaneous" is hereby amended by replacing the third

    paragraph on page 61 with the following:




In connection with Lazard's services as financial advisor to IEA with respect to
the merger, IEA agreed to pay Lazard a fee based on the aggregate consideration
involved in the merger, calculated as of immediately prior to the closing of the
merger (as of August 25, 2022, such amount was estimated to be approximately $17
million), which is payable contingent upon consummation of the merger. In
addition, IEA agreed to pay Lazard a quarterly financial advisory fee of
$300,000, beginning on January 1, 2022, 50% of which is creditable against any
Transaction fee described above, subject to adjustment by mutual agreement after
June 30, 2022. IEA has also agreed to reimburse Lazard for certain expenses
incurred in connection with Lazard's engagement and to indemnify Lazard and
certain related persons under certain circumstances against various liabilities
that may arise from or be related to Lazard's engagement, including certain
liabilities under United States federal securities laws. Other than as described
above, IEA has not agreed to pay Lazard any other compensation in connection
with the Transaction or in connection with any other investment banking services
provided in the past two years, including with respect to strategic planning and
financial matters.


6. The disclosure under the heading "Transaction Summary - IEA Management's

Unaudited Prospective Financial Information" is hereby amended and

supplemented by including the text and the table below (and with respect to

the tables, exactly as the tables appear below) on page 64 of the Definitive

Proxy Statement/Prospectus under the subheading "IEA Prior Management Plan":

The following table presents a summary of the IEA financial projections prepared by IEA in February 2022 and provided to potential counterparties in the strategic outreach process.



                                                      Fiscal Year Ended December 31
($ in mm)                           2022E       2023E       2024E       2025E       2026E       2027E
Total Revenue                      $ 2,492     $ 2,693     $ 2,873     $ 3,067     $ 3,270     $ 3,493
EBIT                               $    96     $   162     $   173     $   183     $   195     $   205
Depreciation & Amortization        $    48     $    50     $    53     $    55     $    58     $    61
Stock-Based Compensation           $     5     $     5     $     5     $     5     $     5     $     5
Adjusted EBITDA(1)                 $   149     $   216     $   230     $   243     $   258     $   271
Income Taxes                       $   (21 )   $   (43 )   $   (46 )   $   (49 )   $   (52 )   $   (54 )
Changes in Net Working Capital     $   (41 )   $   (20 )   $   (18 )   $   (19 )   $   (20 )   $   (22 )
Net Capital Expenditures and
Other Investments                      (23 )       (25 )       (27 )       (29 )       (32 )       (35 )
Unlevered Free Cash Flow           $    68     $   128     $   139     $  
146     $   154     $   160





(1) Adjusted EBITDA represents net income, excluding the impact of income taxes,

depreciation and amortization, interest expense and certain other non-cash,

non-recurring and/or unusual, non-operating items including, but not limited

to, non-cash stock compensation expense, fair value adjustments for warrants,

     and restructuring expenses.



7. The disclosure under the heading "Transaction Summary - IEA Management's

Unaudited Prospective Financial Information" is hereby amended and

supplemented by including the text and the table below (and with respect to

the tables, exactly as the tables appear below) on page 64 of the Definitive

Proxy Statement/Prospectus under the subheading "IEA Updated Management Plan":





The following table presents a summary of the IEA financial projections prepared
by IEA in July 2022 and, at the direction of IEA, Lazard utilized for purposes
of Lazard's analysis in connection with its evaluation of the merger and its
opinion.



                                                      Fiscal Year Ended December 31
($ in mm)                           2022E       2023E       2024E       2025E       2026E       2027E
Total Revenue                      $ 2,492     $ 2,687     $ 2,850     $ 3,004     $ 3,160     $ 3,324
EBIT                               $    96     $   122     $   131     $   138     $   144     $   150
Depreciation & Amortization        $    49     $    51     $    48     $    51     $    53     $    56
Stock-Based Compensation           $     5     $     5     $     5     $     5     $     5     $     5
Adjusted EBITDA(1)                 $   149     $   177     $   184     $   193     $   202     $   210
Income Taxes                       $   (26 )   $   (33 )   $   (35 )   $   (37 )   $   (39 )   $   (40 )
Changes in Net Working Capital     $   (41 )   $   (20 )   $   (16 )   $   (15 )   $   (16 )   $   (17 )
Net Capital Expenditures and
Other Investments                  $   (23 )   $   (25 )   $   (27 )   $   (29 )   $   (31 )   $   (33 )
Unlevered Free Cash Flow           $    59     $   100     $   106     $  
112     $   117     $   121





(1) Adjusted EBITDA represents net income, excluding the impact of income taxes,

depreciation and amortization, interest expense and certain other non-cash,

non-recurring and/or unusual, non-operating items including, but not limited

to, non-cash stock compensation expense, fair value adjustments for warrants,

     and restructuring expenses.









8. The disclosure under the heading "Transaction Summary - Interests of IEA's

Directors and Executive Officers in the Transaction" is hereby amended by

adding the following to the paragraph that begins on page 64 and ends on

    page 65:



As of the signing of the Merger Agreement and as of the date hereof, no post-closing employment arrangements for members of IEA senior management had been proposed by, or secured with, Parent.

Additional Information and Where To Find It




This filing relates to a proposed acquisition of Infrastructure & Energy
Alternatives, Inc. (IEA) by MasTec, Inc. (MasTec). In connection with the
proposed acquisition, MasTec and IEA have filed relevant materials with the
Securities and Exchange Commission (SEC), including a Registration Statement on
Form S-4 filed by MasTec that included a definitive proxy statement of IEA and
also constitute a prospectus with respect to the shares of common stock of
MasTec to be issued in the proposed transaction. This communication is not a
substitute for any prospectus, proxy statement or any other document that may be
filed with the SEC in connection with the proposed business combination.



INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE DEFINITIVE PROXY
STATEMENT/PROSPECTUS AND OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY AND IN
THEIR ENTIRETY BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED
TRANSACTION.


Investors and security holders may able to obtain these materials and other
documents filed with the SEC free of charge at the SEC's website, www.sec.gov.
Copies of documents filed with the SEC by MasTec may be obtained free of charge
at MasTec's website at MasTec.com. Copies of documents filed with the SEC by IEA
may be obtained free of charge on IEA's website at iea.net.



Participants in the Solicitation




IEA and its directors, executive officers and certain other members of
management and employees may be deemed to be participants in the solicitation of
proxies in respect of the proposed transaction. Information regarding these
persons who may, under the rules of the SEC, be considered participants in the
solicitation of IEA stockholders in connection with the proposed transaction and
their interests in the transaction are set forth in the proxy
statement/prospectus described above filed with the SEC on September 8, 2022. To
the extent the holdings of IEA securities by IEA directors and executive
officers have changed since the amounts set forth in the Definitive Proxy
Statement/Prospectus, such changes have been or will be reflected on Statements
of Change in Ownership on Form 4 filed with the SEC. These documents may be
obtained free of charge at the SEC's web site at www.sec.gov and on the Investor
Relations page of the Company's website located at iea.net.

© Edgar Online, source Glimpses

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Managers and Directors
John Paul Roehm President & Chief Executive Officer
Peter J. Moerbeek Chief Financial Officer, Treasurer & Executive VP
Michael E. Stoecker Chief Operating Officer & Executive Vice President
Robert E. Apple Director
Aaron Reddington Vice President-Investor Relations
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