HVAC Breaking News

May 26, 2003: Encompass Announces Asset Purchase Agreement

May 26, 2003
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HOUSTON — Encompass Services Corp. announced that it has entered into an asset purchase agreement, under which substantially all of the assets of the company's Residential Services group will be sold to Residential Acquisition Corp., a company formed by Wellspring Capital Management LLC or certain of its affiliates.

Under this agreement, the assets of the company's Residential Services group will be sold for approximately $40 million, plus the assumption of certain related liabilities. The company entered into the asset purchase agreement after obtaining authority from the United States Bankruptcy Court for the Southern District of Texas, which has jurisdiction over the company's and its subsidiaries' jointly administered Chapter 11 cases, Case No. 02-43582, filed on Nov. 19, 2002.

The sale of the Residential Services group assets is subject to conditions, including confirmation of the Second Amended Joint Plan of Reorganization, which was filed with the bankruptcy court on April 11, 2003, or subsequent order of the bankruptcy court authorizing the sale.

The current management team of the Residential Services group, led by Eric Salzer, will remain with the business. It will specialize in installing and servicing HVAC and plumbing systems in newly constructed and existing homes. The new company will be headquartered in Dayton, Ohio, with operations in nine states.

"This is an important step in the Residential Services group's emergence. We are on schedule towards our objective of a completed transition to a stand-alone company by early summer," said Salzer.

The company also announced that it has completed the sale of the remaining assets relating to its Commercial/Industrial Services group.

"We are pleased to announce this final phase of our restructuring is coming to a close," said Michael F. Gries, chief restructuring officer of Encompass Services Corp. "With the sale of our Residential Services group, the company will have made significant progress with its restructuring efforts in a short period of time. We have sold substantially all of the company's operating businesses as on-going enterprises and will seek confirmation of our plan of reorganization this month."

Publication date: 05/26/2003

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