Integrated Electrical granted court OK of $100 million surety bonding facility

By Caroline Salls

Pittsburgh, March 14 - Integrated Electrical Services, Inc. obtained final court approval of an up to $100 million surety bonding facility from Edmund C. Scarborough, Individual Surety, according to a Monday filing with the U.S. Bankruptcy Court for the Northern District of Texas.

According to the motion, the company's ability to procure and then perform under construction contracts is dependent on its ability to secure bid, payment and performance bonds for the benefit of its customers, including project owners and general contractors.

Integrated Electrical said because its current financial situation is now widely known in the construction industry, more customers are requesting bonds on new projects.

Accordingly, the company said it must be able to procure new bid, payment and performance bonds if it is to secure all of the new construction contracts that are necessary to its ability to preserve the value of the estates, as well as to fulfill bonding requirements under existing contracts in order to maintain ongoing relationships with existing customers.

Under the Scarborough agreement, there will be a $15 million limitation on individual bonds.

Bonding will be subject to Scarborough's receipt of a $2 million irrevocable letter of credit from Sun Trust Bank to secure all of Integrated Electrical's obligations to Scarborough.

Upon delivery of the letter of credit and payment of applicable bond premiums, Scarborough will issue $37.5 million of bonds to cover the company's backlog of existing and pending contracts and projects.

Integrated Electrical Services, a Houston-based provider of electrical services to the commercial, industrial and residential markets, filed for bankruptcy on Feb. 14. Its Chapter 11 case number is 06-30602.

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