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Subsequent Events
12 Months Ended
Dec. 31, 2015
Subsequent Events [Abstract]  
Subsequent Events
SUBSEQUENT EVENTS (UNAUDITED)
Acquisition of Underground Solutions
On February 18, 2016, the Company acquired Underground Solutions for a purchase price of $85 million plus an additional $5.3 million for the discounted value of the estimated tax benefits associated with Underground Solutions’ net operating loss carry forwards, and is subject to post-closing working capital adjustments and post-closing adjustments to the value of the net operating loss tax assets. The purchase price included $6.3 million held in escrow as security for the post-closing purchase price adjustments and post-closing indemnification obligations of Underground Solution’s previous owners. The transaction was funded partially from cash reserves and partially from borrowings under the Company’s revolving credit facility. To supplement the cash reserves, the Company repatriated approximately $30.4 million from foreign subsidiaries to assist in funding the transaction, incurring approximately $3.5 million in additional taxes, a reserve for which is included in the Company’s tax provision amounts for 2015. Underground Solutions provides infrastructure technologies for water, sewer and conduit applications and is part of the Company’s Infrastructure Solutions reportable segment. Given the timing of the acquisition, it was impracticable for the Company to complete a preliminary purchase price allocation.
Sale of Bayou Perma-Pipe Canada, Ltd.
On February 1, 2016, we sold our fifty-one percent (51%) interest in our Canadian coating joint venture, BPPC to our joint venture partner, Perma-Pipe for a sale price of US $9.6 million. Perma-Pipe owned the remaining forty-nine percent (49%) interest in BPPC and is owned by MFRI, Inc., an unaffiliated U.S. company. BPPC served as our pipe coating and insulation operation in Canada and was part of our Corrosion Protection reportable segment. The sale of its interest in BPPC was part of a broader effort by the Company to reduce its exposure in the North American upstream market in light of expectations for a prolonged low oil price environment. As a result of the sale, the Company recognized a pre-tax, non-cash charge of approximately $0.6 million at December 31, 2015 to reflect the expected loss on the sale of the business. This loss was derived primarily from the release of cumulative currency translation adjustments and was recorded to other income (expense) in the Consolidated Statement of Operations.
2016 Restructuring
On January 4, 2016, the Company’s board of directors approved the 2016 Restructuring to reduce its exposure to the upstream oil markets and to reduce consolidated annual expenses. As part of management’s ongoing assessment of its energy-related businesses, the Company determined that the persistent low price of oil is expected to create market challenges for the foreseeable future, including reduced customer spending in 2016. The 2016 Restructuring is expected to reposition Energy Services’ upstream operations in California, reduce Corrosion Protection’s upstream exposure by divesting its interest in a Canadian pipe coating joint venture, right-size Corrosion Protection to compete more effectively and reduce corporate and other operating costs. The 2016 Restructuring is expected to reduce annual operating costs by approximately $15.0 million, most of which is expected to be realized in 2016, primarily through headcount reductions and office closures.
As part of the 2016 Restructuring, the Company expects to reduce headcount by approximately 652 employees, or 10.5% of the Company’s total workforce, and record estimated pre-tax charges, most of which are cash charges, between $7.0 million to $9.0 million. The 2016 Restructuring charges are expected to consist primarily of employee severance, extension of benefits, employment assistance programs, early lease termination and other non-cash costs.