Shimmick Corp., which has focused on water infrastructure since AECOM sold it to private owners in 2021, raised about $25 million this past week in a rare initial public offering of shares by a contracting company.
The company offered 3.6 million shares at $7, "well below the range of $10 to $12," according to Renaissance Capital, and almost one million "fewer shares than anticipated."
The offering closed Nov. 16 and the company planned to trade on the NASDAQ exchange under the symbol SHM, it said.
In its offering plan filed with the U.S. Securities and Exchange Commission, Shimmick reported a loss of $12 million in the first six months of 2023, on revenue of $319 million, compared to net income of $3.7 million on $293 million in the same period last year. The company reported net income of $3.8 million on revenue of $664 million in 2022, and net income of $44.5 million on revenue of $572 million in 2021.
"Following our successful initial public offering, we are focused on leveraging this opportunity to accelerate our growth and build on our strengths as a leading water solutions and critical infrastructure provider,” said Steve Richards, Shimmick CEO. “The funding will allow us to invest further in our people, technology, and new strategic acquisitions. We're excited about this next chapter and the opportunities it brings to better serve our customers and shareholders."
Troubled Project Lingers as Sale Is Made
Among the risk factors cited in the Irvine, Calif.-based company's filings are its dispute with former owner AECOM over final terms of the 2021 sale.
According to Shimmick, AECOM believes it is entitled to $40 million of a $50 million recovery on one particular joint venture project—the Gerald Desmond Bridge in Long Beach, Calif., although the former owner is not named in the security filing. The engineering firm filed a lawsuit last year in Chancery Court in Delaware pressing its claims.
Because of the uncertain future revenue stream, AECOM negotiated a minimal base purchase price plus an earn out based on a formula.
Under the purchase agreement, Shimmick pledged to share with AECOM portions of its "ultimate recoveries" from legacy projects.
Shimmick states in its public filing that AECOM's claim fails to take into account the millions of dollars of losses that Shimmick funded following the closing of the sale, "the absence of which would have impaired our ability" to recover money on the claim. Shimmick also disputes AECOM's details about the claim and money involved.
AECOM officials could not be reached immediately for comment on the dispute, and Shimmick officials declined to comment on the matter.
As sale negotiations were carried out and at the time of the sale, Chancery Court Judge Morgan T. Zurn wrote in a ruling on various motions, AECOM was guarantor of Shimmick bonds. The joint venture contractors, Shimmick, FCC Construction S.A. and Impregilo S.A., had mounting losses as project construction costs, contracted at $820 million, were projected to hit $1.02 billion.
Details and interpretation of the data for the earnout are what is now being disputed in court.