Mike Nartker
WC Monitor
1/16/2015
In response to recent financial challenges, CH2M Hill is asking employee shareholders to approve a proposal that would allow the company to seek minority investment from outside investors. Last week, CH2M Hill issued a preliminary proxy statement outlining proposals the company said would “provide … greater flexibility in raising additional capital and are intended to facilitate a third party minority investment in CH2M HILL’s capital stock by one or more large sophisticated investors.” Among the proposals to be considered is the elimination of the “prohibition on the issuance of common stock, directly or indirectly, to persons other than employees, directors, consultants or employee benefit trusts without the consent of CH2M HILL stockholders, and to permit such third party investors to transfer CH2M HILL common stock, subject to any contractual limitations,” the proxy statement says.
Last month, CH2M Hill reported a net loss of $131 million for the third quarter of 2014. In the preliminary proxy statement, CH2M Hill President and CEO Jacqueline Hinman wrote, “As you may know, CH2M HILL is facing cash flow and liquidity constraints as the result of certain recent project losses and other adverse operating results, and management is taking specific action steps to address and improve our operational and financial performance. This includes an important restructuring program to reduce costs and improve margins, which requires significant short term funding. In response, our management and Board of Directors have been considering options for raising additional capital to invest in the business, fund the restructuring program, provide further liquidity to the internal market and for other corporate purposes. Over the course of these deliberations, our Board has determined that amending our Certificate of Incorporation is desirable to provide greater flexibility to achieve these goals, and is recommending these changes to our stockholders.”
CH2M Hill stressed, though, that its proposal does not mean the company is going public. “CH2M HILL has no current intention of selling a controlling stake to a third party or listing its shares for trading. The proposed amendments are intended to facilitate a minority investment in CH2M HILL’s capital stock by one or more large sophisticated investors and to make certain related changes,” the preliminary proxy statement says.
