Lockwood International recently engaged Imperial Capital to explore strategic and financial alternatives, including a capital raise or sale, two sources familiar with the situation said.
The private specialty manufacturer has a forbearance from lenders to its USD 60m revolver with Wells Fargo, the sources said. The revolver is fully drawn and Lockwood has limited cash on hand, the sources added.
Houston-based Lockwood supplies custom pipe, valves, fittings and flanges (PVF) to the oil and gas, auto and aviation sectors; and has facilities across the US, Asia, Europe and Australia. It was formed by Frank Lockwood with USD 50,000 in 1977, according to its website.
Lockwood has contracts with many oil majors and the bulk of its revenue stems from upstream and midstream clients, the sources said. Like many other oilfield services (OFS) companies, Lockwood’s business has been battered by shrinking demand from producers amidst the commodities crash.
“Inventory is our double-edged sword. I wish mine was zero some days and it was infinite other days,” said Mike Lockwood, who took over the reins in 1987 with his brother Tom Lockwood, in a company video.
Compounding to its woes, many upstream and midstream players have suspended operations in the wake of Hurricane Harvey. SM Energy, Energy XXI and Denbury Resources have all reported shut-in wells and projected as long as eight weeks to fully restore their production.
However, Lockwood could potentially benefit from the storm recovery efforts as the company offers repair services after an emergency shutdown, the sources said.
Lockwood and Imperial did not return requests for comment. Wells Fargo declined comment.