Exterran Holdings, Inc. (NYSE:EXH) announced today an update to
the planned financing in connection with its previously announced
separation.
In November 2014, Exterran Holdings announced that it intends to
separate its international contract operations, international
aftermarket services and global fabrication businesses into a
standalone, publicly traded company named Exterran Corporation.
Upon completion of the spin-off, Exterran Holdings, which will
continue to own and operate its contract operations and aftermarket
services businesses in the United States, will be renamed Archrock,
Inc.
Spin-off Transaction Details and Next Steps
Exterran Holdings has reached financing arrangements for
Exterran Corporation and Archrock, Inc. that enable Exterran
Holdings to move forward with the separation transaction through an
all secured financing structure. As a result, Exterran Holdings
expects that the spin-off of Exterran Corporation will take place
in the fourth quarter 2015. The completion of the spin-off will be
subject to completion of a review by the U.S. Securities and
Exchange Commission of Exterran Corporation’s Form 10, the receipt
of an opinion of counsel as to the tax-free nature of the
transaction, the execution of separation and intercompany
agreements and final approval of the Exterran Holdings board of
directors.
Update on Credit Facilities
As previously announced, Exterran Corporation entered into a
$750 million revolving credit facility on July 10, 2015 that would
become available upon the completion of the separation and the
satisfaction of certain other conditions. On Oct. 5, 2015, Exterran
Corporation amended and restated the credit agreement to provide
for a new $925 million credit facility, consisting of a $680
million revolving credit facility and a $245 million term loan
facility. The revolving credit facility will have an interest rate
subject to a leverage grid with an expected initial interest rate
of LIBOR plus 2.75%. The term loan will carry an interest rate of
LIBOR plus 5.75%, with a 1.00% LIBOR floor. Availability under the
new credit facility is conditioned upon the completion of the
separation and the satisfaction of certain other customary
conditions. The revolving credit facility will mature five years
after the effective date of the separation transaction, and the
term loan facility will mature two years after the effective date
of the separation transaction.
The new credit facility includes, among other covenants,
financial covenants requiring Exterran Corporation to maintain
(after the separation) an Interest Coverage Ratio of not less than
2.25:1.00 and a Total Leverage Ratio of not greater than 3.75:1.00.
Should Exterran Corporation refinance the term loan facility with
the proceeds of certain qualified unsecured debt or equity
issuances, the financial covenants in the revolving credit facility
will be modified to require that Exterran Corporation maintain a
Total Leverage Ratio of not greater than 4.50:1.00 and a Senior
Secured Leverage Ratio of not greater than 2.75:1.00, while the
Interest Coverage Ratio will not change. Such capitalized terms are
defined in the amended and restated credit agreement.
In connection with the spin-off, Exterran Holdings anticipates
that Exterran Corporation initially will borrow under its new
credit facility and transfer an amount of proceeds to Exterran
Holdings which, when taken together with the proceeds from
borrowings under the Archrock credit facility as described below,
will enable Exterran Holdings to repay all of its existing
indebtedness.
As of June 30, 2015, on a pro forma basis after giving effect to
the spin-off, Exterran Corporation would have borrowed and
transferred to Exterran Holdings approximately $539 million.
Subsequent to June 30, 2015 and prior to the completion of the
spin-off, Exterran Holdings expects to incur additional borrowings
under its existing credit facility of between $40 million and $50
million to finance expenses related to the completion of the
spin-off, which will increase the amount that Exterran Corporation
borrows under its new credit facility and transfers to Exterran
Holdings.
Also as previously announced, Exterran Holdings entered into a
$300 million credit facility on July 10, 2015 that would become
available upon the completion of the separation and the
satisfaction of certain other conditions. On Oct. 5, 2015, Exterran
Holdings executed a first amendment to the credit agreement that,
among other things, increases the aggregate commitments under the
revolving credit facility from $300 million to $350 million. As
previously announced, the revolving credit facility includes, among
other covenants, financial covenants requiring Archrock, Inc. to
maintain (after the separation) an Interest Coverage Ratio of not
less than 2.25:1.00 and a Total Leverage Ratio of not greater than
4.25:1.00 (except that the maximum Total Leverage Ratio during a
Specified Acquisition Period will be increased to 4.75:1.00), as
those capitalized terms are defined in the credit agreement. The
revolving credit facility will have an interest rate subject to a
leverage grid with an expected initial interest rate of LIBOR plus
1.75%.
Archrock, Inc.’s indebtedness under its credit facility upon the
closing of the spin-off, and following the redemption of Exterran
Holding’s 7.25% Senior Notes of $350 million, is expected to be
approximately $170 million less the aggregate amount of installment
payments Exterran Holdings receives from the Venezuelan state-owned
oil company before completion of the spin-off. Archrock, Inc.
expects to incur additional borrowings under its credit facility of
approximately $10 million to $15 million to finance expenses
related to the completion of the spin-off. The amount of
indebtedness of Exterran Partners will not be impacted by the
separation.
Venezuela Receivable
At Sept. 30, 2015, subsidiaries of Exterran Corporation were due
approximately $96 million of principal payments from the previously
announced sales of nationalized Venezuelan assets. In connection
with the spin-off, Exterran Corporation’s subsidiary will transfer
to an Archrock subsidiary the right to receive an amount equal to
the payments made on those remaining receivables as they are
received from the Venezuelan state-owned oil company.
Other Arrangements
In connection with the spin-off, a subsidiary of Exterran
Corporation will transfer to a subsidiary of Archrock the right to
receive $25 million upon Exterran Corporation’s completion of
certain qualified unsecured debt or equity issuances and repayment
in full of the term loan portion of Exterran Corporation’s credit
facility after the spin-off. Exterran Corporation will use its
commercially reasonable efforts to complete such a capital raise on
or before the maturity date of its term loan or as soon as
practicable thereafter.
About Exterran Holdings
Exterran Holdings, Inc. is a global market leader in
full-service natural gas compression and a premier provider of
operations, maintenance, service and equipment for oil and gas
production, processing and transportation applications. Exterran
Holdings serves customers across the energy spectrum – from
producers to transporters to processors to storage owners.
Headquartered in Houston, Texas, Exterran has approximately 10,000
employees and operates in approximately 30 countries. Exterran
Holdings owns an equity interest, including all of the general
partner interest, in Exterran Partners, L.P. (NASDAQ: EXLP), a
master limited partnership, the leading provider of natural gas
contract compression services to customers throughout the United
States. For more information, visit www.exterran.com.
Upon completion of the spin-off, Exterran Holdings will be
renamed Archrock, Inc. Archrock will be the leading provider of
natural gas contract compression services to customers throughout
the United States. In addition, Archrock will be a leading supplier
of aftermarket services to customers that own compression equipment
in the United States. Archrock will be headquartered in Houston,
Texas, operating in the major oil and gas producing regions in the
United States. Archrock will continue to own an equity interest,
including all of the general partner interest, in Archrock
Partners, L.P. (which Exterran Partners, L.P. will be renamed upon
completion of the spin-off).
About Exterran Corporation
Exterran Corporation will be a market leader in compression,
production and processing products and services, serving customers
throughout the world engaged in all aspects of the oil and natural
gas industry. Its global product lines will include natural gas
compression, process & treating and production equipment and
water treatment solutions. Outside the United States, Exterran
Corporation will be a leading provider of full-service natural gas
contract compression and a supplier of new, used, OEM and
aftermarket parts and services. Exterran Corporation will be
headquartered in Houston, Texas, and will operate in approximately
30 countries with approximately 7,000 employees.
Cautionary Information
While Exterran Holdings is committed to the spin-off, there can
be no assurance that any transaction will ultimately be consummated
and there can be no assurance of the terms or timing of such
transaction if it is consummated. Exterran Holdings may, at any
time and for any reason until the proposed transaction is complete,
abandon the separation or modify or change the terms of the
spin-off.
All statements in this release (and oral statements made
regarding the subjects of this release) other than historical facts
are forward-looking statements within the meaning of Section 21E of
the Securities Exchange Act of 1934, as amended. These
forward-looking statements rely on a number of assumptions
concerning future events and are subject to a number of
uncertainties and factors, many of which are outside Exterran
Holdings’ control, which could cause actual results to differ
materially from such statements. Forward-looking information
includes, but is not limited to: Exterran Holdings’ plan to conduct
a separation of certain of its businesses; the possibility that the
proposed separation will be consummated; the timing of the
consummation of the proposed separation transaction; statements
regarding the expected capital structures of Exterran Corporation
and Archrock, Inc.; statements regarding the credit facilities of
Exterran Corporation and Archrock and the expected interest rates
and amounts of borrowings under those facilities upon the closing
of the separation; statements regarding Exterran Corporation’s use
of proceeds from its expected indebtedness; statements regarding
amounts owed by the Venezuelan state-owned oil company and the
transfer of equivalent amounts to an Archrock subsidiary after the
separation; and statements regarding Exterran Corporation’s
transfer of $25 million to an Archrock subsidiary upon completion
of certain debt or equity offerings after the closing of the
separation.
While Exterran Holdings believes that the assumptions concerning
future events are reasonable, it cautions that there are inherent
difficulties in predicting certain important factors that could
impact the future performance or results of its business. Among the
factors that could cause results to differ materially from those
indicated by such forward-looking statements are: local, regional,
national and international economic conditions and the impact they
may have on Exterran Holdings, Exterran Corporation, Archrock and
their customers; changes in tax laws that impact master limited
partnerships; conditions in the oil and gas industry, including a
sustained decrease in the level of supply or demand for oil or
natural gas or a sustained decrease in the price of oil or natural
gas; delays, costs and difficulties that could impact the
completion and expected results of the proposed separation
transaction; Exterran Holdings’, Exterran Corporation’s and
Archrock’s ability to timely and cost-effectively execute larger
projects; changes in political or economic conditions in key
operating markets, including international markets; any
non-performance by third parties of their contractual obligations;
changes in safety, health, environmental and other regulations; and
the performance of Exterran Partners.
These forward-looking statements are also affected by the risk
factors, forward-looking statements and challenges and
uncertainties described in Exterran Holdings’ Annual Report on Form
10-K for the year ended December 31, 2014, Exterran Corporation’s
Registration Statement on Form 10 and Exterran Holdings’ filings
with the Securities and Exchange Commission, which are available at
www.exterran.com. Except as required by law, Exterran Holdings and
Exterran Corporation expressly disclaim any intention or obligation
to revise or update any forward-looking statements whether as a
result of new information, future events or otherwise.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20151006005662/en/
Exterran Holdings, Inc.MediaSusan Moore,
281-836-7398orInvestorsDavid Oatman, 281-836-7035
Archrock (NYSE:AROC)
Historical Stock Chart
From Aug 2024 to Sep 2024
Archrock (NYSE:AROC)
Historical Stock Chart
From Sep 2023 to Sep 2024