Golden Pass commits to completing LNG project despite Zachry bankruptcy - KFDM-TV News
Golden Pass commits to completing LNG project despite Zachry bankruptcy
Port Arthur — Golden Pass LNG continues to work on the Sabine Pass project and is committed to its completion, despite the bankruptcy filing by the lead contractor, Zachry Holdings, according to a statement a spokesperson released to KFDM/Fox 4 News.
“Golden Pass LNG acknowledges the bankruptcy filing by Zachry Industrial, Inc., a party to the EPC contract for construction of our LNG terminal," according to the spokesperson for Golden Pass LNG. "Work continues on the project with McDermott and Chiyoda, the other two parties to the EPC contract, with thousands of workers on site. The project is already 75% progressed and we are committed to completing the project.”
KFDM/Fox 4 reached out to Jefferson County Judge Jeff Branick, who spent more than a decade working with Golden Pass to bring the project to Jefferson County.
"I am remaining in pretty constant contact with the parties," Judge Branick told us. "I realize that work is ongoing. The job, to my understanding, is 75% complete. Golden Pass assures me that they are committed to completing the job."
Zachry Holdings, the primary contractor at the Golden Pass LNG project in Jefferson County, filed for a voluntary, court-supervised Chapter 11 bankruptcy process, according to a statement the company released today.
The contractor says the process "provides them with time and flexibility to resolve issues related to the Golden Pass LNG (GPX) export terminal project in Sabine Pass."
Zachry says several factors led to the filing.
“We have built a strong business over the last 100 years by providing our customers the highest quality turnkey engineering, construction, maintenance, turnaround, and fabrication services," said John B. Zachry, Chairman and CEO of ZHI. "Since beginning work on the Golden Pass LNG project in 2019, we have maintained our usual high standards of excellence and gone above and beyond to accommodate the schedule and demands of GPX and its shareholders, QatarEnergy and ExxonMobil. As the project’s lead contractor, we have navigated significant challenges and disruptions stemming first from the COVID-19 pandemic and, more recently, international geopolitical issues. These unforeseen disruptions have resulted in significant financial strain while meeting targets and keeping the project appropriately staffed.
He continued, “We have been transparent with GPX and its shareholders as we have attempted to reach a mutually agreeable resolution to these issues. Because we have been unable to find a path forward, we have been forced to take action to protect our business. The process we are starting today provides us mechanisms to initiate a structured exit from the GPX project. It also enables us to take certain actions that will improve our performance and better position our business for the future.”
Zachry contract workers at the LNG project have been off the job for about two weeks. Golden Pass released a statement to KFDM on May 9.
"Golden Pass LNG acknowledges ongoing discussions regarding the role of Zachry within CCZJV. Work continues to diligently complete the project, but these discussions may impact site activity in the near term. Golden Pass cannot discuss contractual matters and will share additional information when available.”
The Golden Pass LNG Production Plant began a $10 billion project in Sabine Pass in early 2019, adding liquefaction and export capabilities.
"That's world class," said David Williams, Senior Project Manager, at the time. "They don't build projects this size very many places in the world."
The project was expected to create about 9,000 construction jobs in a five year period and more than 200 permanent jobs once it's complete, providing a big boost to the local economy.
"Every dollar that is earned here gets spent back into the economy," Williams said at the time. "Whether it's at restaurants, grocery stores, or gas stations, and so the ripple effect is just going to be huge for the Jefferson County and Tri-County area."
Jefferson County Judge Jeff Branick said at the time, the challenge that comes from this project is assuring that they have the workforce needed for the jobs that are created.
"It's a wonderful day," said Judge Branick when the project was announced in 2019. "It's been 12 years since I've been working on this project with Golden Pass, and to make the final investment decision is just thrilling for me."
Zachry Holdings - Zachry Holdings, Inc. (the “Company” or “ZHI”) today announced that ZHI and certain of its subsidiaries have initiated a voluntary court-supervised Chapter 11 process that provides them with time and flexibility to resolve issues related to the Golden Pass LNG (GPX) export terminal project in Sabine Pass, TX. This action is intended to strengthen the Company’s overall financial position as it continues to serve its customers across the energy, chemicals, power, manufacturing, and industrial industries. Work at all remaining jobsites is continuing without interruption, and ZHI remains committed to delivering outstanding execution while upholding the highest standards of safety and quality.
John B. Zachry, Chairman and CEO of ZHI said, “We have built a strong business over the last 100 years by providing our customers the highest quality turnkey engineering, construction, maintenance, turnaround, and fabrication services. Since beginning work on the Golden Pass LNG project in 2019, we have maintained our usual high standards of excellence and gone above and beyond to accommodate the schedule and demands of GPX and its shareholders, QatarEnergy and ExxonMobil. As the project’s lead contractor, we have navigated significant challenges and disruptions stemming first from the COVID-19 pandemic and, more recently, international geopolitical issues. These unforeseen disruptions have resulted in significant financial strain while meeting targets and keeping the project appropriately staffed.
He continued, “We have been transparent with GPX and its shareholders as we have attempted to reach a mutually agreeable resolution to these issues. Because we have been unable to find a path forward, we have been forced to take action to protect our business. The process we are starting today provides us mechanisms to initiate a structured exit from the GPX project. It also enables us to take certain actions that will improve our performance and better position our business for the future.”
Mr. Zachry concluded, “All other projects and company efforts continue to perform in line with expectations, and we will continue serving our customers while maintaining our commitment to quality and safety as we move through this process. We thank our customers, vendors, partners, and community stakeholders for their continued support. We are also grateful to our employees for the excellent work they perform on a daily basis and for how they represent our company.”
Additional Information About the Court-Supervised Process
ZHI and certain of its subsidiaries have filed voluntary petitions for a court-supervised restructuring under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Texas.
The Company expects that its cash on hand, along with cash generated from operations, will provide sufficient liquidity for the Company to meet its ongoing business obligations during the court-supervised process.
The Company has filed a number of customary motions seeking court authorization to continue to support its ongoing operations during the court-supervised process. Subject to approval of these motions, the Company does not expect this process to impact employee wages, health and welfare benefits plans, or qualified retirement savings plans. The Company expects to receive court approval for these requests. ZHI also intends to pay vendors and suppliers in full under normal terms for goods and services provided during the bankruptcy case.
Additional information regarding the Company’s court-supervised process is available at www.ZHIrestructuring.com.
Court filings and other information related to the proceedings are available on a separate website administered by the Company’s claims and noticing agent KCC at www.kccllc.net/zhi, by calling KCC toll-free at (866) 479-8211 (U.S./Canada) or (781) 575-2037 (International), or by submitting an inquiry at www.kccllc.net/zhi/inquiry.
White & Case LLP is serving as legal advisor to ZHI and M3 Advisory Partners, LP is serving as financial and restructuring advisor.
About Zachry Holdings, Inc.
Zachry Holdings, Inc. is North America’s pacesetter in turnkey engineering, construction, maintenance, turnaround, and fabrication services to the energy, chemicals, power, manufacturing, and industrial sectors. We work with customers to plan, build, and renew their most critical facilities, so they can achieve their immediate and long-term goals, all at the highest safety standards. Since 1924, we have been a purpose-driven organization, united by a shared set of values and the desire to deliver the very best outcome for our customers. Visit zachrygroup.com for more information.
Forward-Looking Statements
Statements in this press release that are not statements of historical or current fact constitute forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that could impact the Company’s objectives and plans or cause the actual results of the Company to differ significantly from the historical results or from any future results expressed or implied by such forward-looking statements. Important factors that could cause or contribute to such differences include, but are not limited to, risks and uncertainties relating to the Chapter 11 process, competition in the industry, general domestic or international economic conditions, and changes in laws or regulations. In addition to statements which explicitly describe such risks and uncertainties, readers are urged to consider statements labeled with the terms “believes,” “belief,” “expects,” “intends,” “anticipates,” “plans,” or similar terms to be uncertain and forward-looking.