A Prince William County company that is helping on two major highway projects in the region, including the Woodrow Wilson Bridge, averted a cash crisis last week when its banker agreed to reschedule a series of loans following a default two months ago.
The deal between Williams Industries Inc. and United Bank was made public yesterday and gives the company until next year to pay off a $5.4 million loan, according to documents filed with the Securities and Exchange Commission.
In an earlier SEC filing, the company had anticipated "considerable disruption" in its work if the bank insisted on collecting what it is owed right away -- potentially complicating two of the region's most important transportation projects. Along with its work on the Woodrow Wilson Bridge, the company is helping build nine bridges for the complicated Springfield interchange connecting Interstates 95, 395 and 495.
Company officials said they expect to meet all project timetables, despite their financial troubles.
"I have no concern that we wouldn't be able to deliver," said Frank E. Williams III, the company's president and chief executive.
However, project officials are not so sanguine. Though the company is nearing the end of its work on the Wilson Bridge, Larry Cloyed, project manager at Springfield, said the firm's difficulties have "high potential to create delays and the potential to delay milestones," including the scheduled fall opening of highway ramps.
Troubled by soaring steel prices and a recent string of losses, Williams earlier this year defaulted on its debt with United, prompting the bank to ask for the full amount. On Thursday, Williams was given a reprieve if it met a list of conditions, including using land owned by the Williams family as collateral.
The Williams family has sold a parcel of its land in Bedford, Va., to help repay the company's debt. And the company is using property in Wilmington, Del., as well as Williams family land near Manassas, as further collateral for the loan.
Williams relocated its headquarters from the pricier Falls Church area to the outskirts of Manassas more than four years ago. Its steel fabrication plant is on an adjoining piece of land in Prince William County.
Company President Williams also agreed last week to personally guarantee any shortfalls. He said yesterday that he is "cautiously optimistic" that the company will be able to refinance its debt.
The Wilson Bridge and the Springfield projects are the largest contracts in the company's history.
Williams Industries won the $30 million subcontracting job for the Wilson Bridge in April 2003. Steel prices increased shortly afterward, and "the price that we've had to pay has probably doubled since that job was bid," Frank Williams said.
Just nine months later, Williams was awarded a $22 million contract as part of the Springfield project.
However, the company said in its 2004 third-quarter earnings report that the "increases in the cost of steel caused the company to consider not accepting the multi-million dollar Springfield Interchange project award."
The company has lost money for the past three years, and officials blame their losses on the surge in steel prices as well as an inability by Congress to fund an infrastructure spending bill.
"We have not made the money at the company that we should have made," Williams said.
Industry-wide, steel fabrication companies are in a crisis because of the commodity's price increase and a lack of an infrastructure bill that would fund state and federal highways and in turn create jobs for companies such as Williams.
"I would certainly say that the steel fabricating industry is in serious jeopardy," Frank Williams said.
Jim Ruddell, construction manager for the Wilson Bridge, said financial problems at Williams will not slow the project because the company has essentially completed making steel for it.
"They've already fabricated all of the outer loop, and they're nearing completion on the inner loop," he said.
But he said a shockwave went through the steel market in late 2003, when prices suddenly rose after a decade of relative stability. That left those who had not locked in rates vulnerable to sudden spikes that made it difficult to deliver projects for promised amounts.
"In late 2003, the price of steel just started going way up," Ruddell said.