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Integrated Electrical seeks waiver in10-Q filing delay
By Sara Rosenberg
New York, Aug. 16 - Integrated Electrical Services Inc. is seeking a waiver from its bank lenders regarding a delay in filing its 10-Q for the third quarter, according to a company news release. The filing delay resulted from a continuing evaluation of projects that could lead to restatements in one of the company's regions.
The filing delay could lead to a default under the company's $125 million senior secured revolving credit facility and $50 million term loan and under the indenture relating to the company's senior subordinated debt of which $172.9 million was outstanding as of Aug. 13.
The company will have to "seek funding from alternative sources" if it does not get a waiver from lenders, the release said.
Counsel appointed to conduct a special investigation into the evaluation of projects has determined that issues leading to the filing delay were isolated to two subsidiaries, the company said.
At one subsidiary it was found that a series of large contracts, accounted for on a percentage of completion basis in which actual costs projected to be incurred exceed the original projected costs, but appropriate adjustments were not reflected. Also, general and administrative costs were found in respect to a particular contract that did not relate to that contract, and there was recognition of revenue related to the recording of incorrect margin on a particular contract.
Revenues were incorrectly recorded at the second subsidiary. The problems were attributed to a large project that was not identified as part of the company's normal closing process.
The amount of the issues at these two subsidiaries is $5.7 million, of which the amount of the error relating to prior periods is estimated at $1.4 million.
Integrated Electrical is a Houston provider of electrical contracting services.
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