Sec Form 13D Filing - William A. Coskey filing for ENGLOBAL CORP COM (ENGC) - 2025-04-16

The principal business address of each of Mr. Coskey and Alliance, as well as BHC Management Corp., the sole general partner of Alliance ("BHC"), is 3 Dashwood Court, The Hills, Texas 78738.

The principal business of Alliance is investments in securities and other assets. The principal occupation of Mr. Coskey is to serve as the President of BHC. Mr. Coskey also serves as the Chairman of the Board and Chief Executive Officer of the Company. The principal business of BHC is to serve as the general partner of Alliance.

Neither Reporting Person, nor BHC, has, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors).

Neither Reporting Person, nor BHC, has, during the last five years, been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining further violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

Mr. Coskey is a United States citizen. Alliance is a Texas limited partnership. BHC is a Texas corporation.

On August 1, 1994, the Company entered into an agreement to purchase all of the issued and outstanding shares of Industrial Data Systems, Inc., a Texas corporation, in a tax-free exchange of stock. The Company issued 593,750 shares of its Common Stock to Mr. Coskey in exchange for the consideration of 100,000 shares of Industrial Data Systems, Inc. The consideration for the issuance of 593,750 shares Common Stock of the Company to Mr. Coskey was valued at $351,131.On October 27, 1997, Mr. Coskey and his spouse each transferred 593,750 shares of Common Stock of the Company to Alliance. No funds were exchanged for the transfer of these shares.On June 16, 1998, Mr. Coskey and his spouse acquired an aggregate of 13 shares of Common Stock of the Company at the time the Company became listed with the American Stock Exchange. Mr. Coskey and his spouse purchased these shares of Common Stock using their own personal funds, for an aggregate purchase price of approximately $500.From November 17, 2017 through December 8, 2017, Alliance acquired an aggregate of 21,458 shares of Common Stock of the Company through open market purchases. Alliance purchased these shares of Common Stock using its working capital, for an aggregate purchase price of approximately $135,615.On July 12, 2023, in recognition of the services provided by members of the Company's Board of Directors for the 2023-2024 service term, Mr. Coskey received 28,572 restricted shares of the Common Stock, valued at $80,000 based on the fair market value of the shares on the date of grant, or $2.80 per share. The shares vested in equal installments on September 30, 2023, December 31, 2023, March 31, 2024 and June 30, 2024.

The securities covered by this Amendment No. 4 were acquired for investment purposes.Mr. Coskey currently serves as the Chairman of the Board and Chief Executive Officer of the Company. As the Chairman of the Board and Chief Executive Officer of the Company, Mr. Coskey may have influence over the corporate activities of the Company, including activities which may relate to the transactions described in subparagraphs (a) through (j) of Item 4 of Schedule 13D.Except as set forth in this Item 4, none of the Reporting Persons have any present plans or proposals that relate to or that would result in any of the actions specified in clauses (a) through (j) of Item 4 of Schedule 13D. The Reporting Persons retain the right to change their investment intent, and may, from time to time, acquire additional shares of Common Stock or other securities of the Company, or sell or otherwise dispose of (or enter into plans or arrangements to sell or otherwise dispose of), all or part of the shares of Common Stock or other securities of the Company, if any, beneficially owned by them, in any manner permitted by law.

The Reporting Persons have the following beneficial ownership in the Company's Common Stock:(1) Mr. Coskey is the beneficial owner of 1,133,660 shares of Common Stock (28,585 shares of Common Stock jointly held by Mr. Coskey and his spouse, and 1,105,075 shares of Common Stock held by Alliance, over which he may be deemed to have shared voting and/or dispositive power as the President of BHC, the sole general partner of Alliance), which represents approximately 22.0% of the outstanding shares of Common Stock of the Company (based on 5,156,583 shares of Common Stock outstanding on November 12, 2024, as reported in the Company's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 12, 2024).(2) Alliance is the beneficial owner of 1,105,075 shares of Common Stock (all held directly by Alliance), which represents approximately 21.4% of the outstanding shares of Common Stock of the Company (based on 5,156,583 shares of Common Stock outstanding on November 12, 2024, as reported in the Company's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 12, 2024).

See the Reporting Persons section of this Schedule 13D/A for the number of Common Shares as to which each Reporting Person has the sole or shared power to vote or direct the vote and sole or shared power to dispose or to direct the disposition.

None of the Reporting Persons has acquired or disposed of any securities of the Company during the 60 days prior to the filing of this Amendment No. 4.

Except as set forth herein, no other person is known by the Reporting Persons to have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, Common Stock beneficially owned by the Reporting Persons.

Not applicable.

Pursuant to Rule 13d-1(k) promulgated under the Act, the Reporting Persons entered into a Joint Filing Agreement (the "Joint Filing Agreement") with respect to the joint filing of the Statement and any amendment or amendments thereto. The foregoing description of the Joint Filing Agreement does not purport to be complete and is qualified in its entirety by the contents of the Joint Filing Agreement, a copy of which is attached hereto as Exhibit 1 and is incorporated herein by reference.Credit AgreementOn April 24, 2024 (the "Closing Date"), Alliance entered into an Amended and Restated Credit Agreement (the "Credit Agreement") with the Company, pursuant to which the parties amended and restated the Credit Agreement dated June 15, 2023 (the "Original Credit Agreement"), between the Company and Alliance to, among other things, (i) modify the existing term loans in the aggregate original principal amount of $1,200,000 (the "Term Loans") to (a) extend the maturity date to July 2, 2025, and (b) reduce the applicable interest rate from 8.5% to 8.0% per annum, and (ii) provide a revolving credit facility (the "Line of Credit") of up to the lesser of (a) the Borrowing Base (as defined below) and (b) $1,000,000. In connection with entering into the Original Credit Agreement, (i) the Company and its subsidiaries, ENGlobal U.S., Inc., a Texas corporation, ENGlobal Government Services, Inc., a Texas corporation, and ENGlobal Technologies, LLC, a Texas limited liability company (collectively, the "Guarantors"), previously entered into a Security Agreement (the "Security Agreement") granting a security interest in favor of Alliance on substantially all of the Company's and Guarantors' assets to secure all of the indebtedness and other obligations owed to Alliance under the Credit Agreement and (ii) the Guarantors previously entered into a Continuing Guaranty (the "Guaranty") pursuant to which the Guarantors guaranteed the payment of all indebtedness owed to Alliance.Set forth below are certain material terms of the Credit Agreement, the Security Agreement, the Guaranty and the First Amendment (collectively, the "Loan Documents"):Term Loans: The first Term Loan was made on June 15, 2023 in an aggregate principal amount equal to $1,000,000 in a single loan which, when paid or prepai d, may not be re-borrowed. An additional Term Loan was made on January 30, 2024 in an aggregate principal amount equal to $200,000 in a single loan which, when paid or prepaid, may not be re-borrowed. On the Closing Date, accrued and unpaid interest of approximately $72 thousand under the Term Loans and origination fees of $6,000 in respect of the Term Loans were added to the principal balance thereof.Line of Credit: Alliance will make advances to the Company from time to time in an aggregate principal amount that will not exceed the lesser of (i) the Borrowing Base, and (ii) $1,000,000 (such amount, the "Credit Limit"), the proceeds of which will be used for working capital and general corporate purposes. The borrowing base (the "Borrowing Base") will be an amount equal to up to 95% of Eligible Receivables (as defined in the Credit Agreement) as determined by Alliance from time to time, less any reserves established by Alliance in its sole discretion from time to time. Alliance will have the right, from time to time, in its credit judgment (i) to establish, modify or eliminate reserves against Eligible Receivables or the Borrowing Base, (ii) to decrease or increase the percentages in the definition of Borrowing Base, or (iii) to adjust any of the criteria set out in the definitions of "Eligible Receivables" or to establish new criteria. Amounts borrowed under the Line of Credit may be repaid in whole or in part and may be reborrowed, subject to the terms and conditions of the Credit Agreement.Interest: The outstanding principal balance of the Term Loans will bear interest (computed on the basis of a 365/366-day year, as the case may be, actual days elapsed) at a per annum rate equal to 8.0%. The outstanding principal balance of the Line of Credit will bear interest (computed on the basis of a 365/366-day year, as the case may be, actual days elapsed) at a per annum rate equal to 12.0%. Interest under the Term Loans and the Line of Credit will be due and payable monthly in arrears on the last business day of each month, with any remaining accrued but unpaid interest payable at maturity.Mandatory Prepayments: The Term Loans are required to be prepaid if the Company (i) issues any equity interests or (ii) incurs any additional indebtedness other than Permitted Indebtedness in which the aggregate capital amount raised pursuant to (i) and/or (ii) is greater than $2,000,000, then 100% of the Net Proceeds received will be paid to Alliance. The Line of Credit is required to be repaid upon receipt of all or any portion of payment from an account debtor of each Eligible Receivable included in the Borrowing Base or if the amount borrowed under the Line of Credit exceeds the Credit Limit.Negative Covenants: The Credit Agreement is subject to negative covenants that, among other things and subject to certain exceptions, limit the Company's ability and the ability of the Guarantors to incur indebtedness, to merge, consolidate, transfer assets or undertake certain transactions outside of the ordinary course of business, to make guarantees; to make loans, advances and investments, to make dividends and distributions, to incur liens or encumbrances, to undertake affiliate transactions and to make certain organizational changes.Maturity Date: The Term Loans and the Line of Credit mature on July 2, 2025.Collateral: The Company and Guarantors have granted Alliance, for the benefit of Alliance, a continuing security interest in all of the Company and Guarantors' now-owned and hereafter acquired property and assets of every kind.Guaranty: Each of the Guarantors jointly and severally guarantee to Alliance prompt payment of the obligations in full when due.Amendment to Credit AgreementOn November 12, 2024, Alliance entered into an amendment to the Credit Agreement (the "First Amendment") with the Company to (i) increase the interest rate from 8.0% per annum to 12.0% per annum under the term loans and (ii) provide that interest will be payable at maturity instead of monthly in arrears under the Term Loans and the Line of Credit. In addition, the First Amendment waived events of default relating to the non-payment of interest.In accordance with the charter of the Company's Audit Committee and the Company's policy on related party transactions, the transactions contemplated by the Loan Documents were reviewed and approved by the Company's Audit Committee and determined in good faith to be on terms no less favorable to the Company than could be obtained from unrelated third parties and fair to the Company and the Guarantors from a financial point of view, and were approved by all of the disinterested members of the Company's Board of Directors.The foregoing description of the Loan Documents does not purport to be complete and is qualified in its entirety by the contents of each of the Loan Documents, copies of which are attached hereto as Exhibit 2, Exhibit 3, Exhibit 4 and Exhibit 5 and are incorporated herein by reference.Sale and Assignment of Credit AgreementOn March 5, 2025 (the "Petition Date"), the Company and its direct and indirect domestic subsidiaries (collectively with the Company, the "Debtors") filed voluntary petitions in the United States Bankruptcy Court for the Southern District of Texas, Houston Division (the "Bankruptcy Court") seeking relief under Chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code"). The Chapter 11 cases are being administered under the caption "In re ENGlobal Corporation, et al.", Case No. 25-90083 (the "Chapter 11 Cases"). The Debtors continue to operate their businesses and manage their properties as "debtors-in-possession" under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court.On March 6, 2024, the Bankruptcy Court entered an interim order authorizing the Company and certain of its direct and indirect domestic subsidiaries (collectively the "Borrowers") to enter into that certain DIP Credit Agreement, dated as of March 5, 2025 (the "DIP Credit Agreement"), with Gulf Island Fabrication, Inc., a Louisiana corporation ("GIFI"), as lender, and the Borrowers entered into the DIP Credit Agreement in accordance with the interim order.Effective April 10, 2025, Alliance entered into a Loan Sale and Assignment Agreement (the "Assignment Agreement") with GIFI, pursuant to which Alliance sold, and GIFI purchased, for a purchase price of $1,500,000, all of Alliance's right, title and interest in and to (i) the Loan Documents, (ii) the loan made by Alliance to the Company thereunder, and (iii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of Alliance (solely in its capacity as a lender under the Credit Agreement) against the Company, any Guarantor or any third party, whether known or unknown, arising under or in connection with the Credit Agreement or any other Loan Document or in any way based on or related to any of the foregoing.The foregoing description of the Assignment Agreement does not purport to be complete and is qualified in its entirety by the contents of the Assignment Agreement, a copy of which is attached hereto as Exhibit 6 and is incorporated herein by reference.

Joint Filing Agreement, dated as of April 16, 2021, by and between the Reporting Persons (incorporated by reference to Exhibit 1 to the Reporting Persons' Schedule 13D filed with the Securities and Exchange Commission on April 16, 2021).Amended and Restated Credit Agreement, dated as of April 24, 2024, by and between the Company, as borrower, and Alliance, as lender (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed with the Securities and Exchange Commission on April 25, 2024).Security Agreement, dated as of June 15, 2023, by and among the Company and the Guarantors, as grantors, and Alliance, as lender (incorporated by reference to Exhibit 10.2 to the Company's Form 8-K filed with the Securities and Exchange Commission on June 20, 2023).Continuing Guaranty, dated as of June 15, 2023, by and among the Guarantors, as guarantors, and Alliance, as lender (incorporated by reference to Exhibit 10.3 to the Company's Form 8-K filed with the Securities and Exchange Commission on June 20, 2023).First Amendment to Amended and Restated Credit Agreement, dated as of November 12, 2024, by and between the Company, as borrower, and Alliance, as lender (incorporated by reference to Exhibit 10.1 to the Company's Form 10-Q filed with the Securities and Exchange Commission on November 12, 2024).Loan Sale and Assignment Agreement dated to be effective as of April 10, 2025, between GIFI and Alliance.