USA Compression Partners, LP (NYSE:USAC) Files An 8-K Other EventsItem 8.01. Other Information.
On March9, 2018, USA Compression Partners, LP (the “Partnership”) and its wholly-owned subsidiary, USA Compression Finance Corp. (“Finance Corp.” and together with the Partnership, the “Issuers”) entered into a purchase agreement (the “Purchase Agreement”), by and among the Issuers, the subsidiary guarantors party thereto and J.P. Morgan Securities LLC and Barclays Capital Inc., as representatives of the initial purchasers listed in Schedule 1 thereto (collectively, the “Initial Purchasers”), to which the Issuers agreed to issue and sell to the Initial Purchasers $725 million in aggregate principal amount of the Issuers’ 6.875% senior notes due 2026 (the “Notes”). The Notes are guaranteed (the “Guarantees”), jointly and severally, on a senior unsecured basis by the Partnership’s existing subsidiaries (other than Finance Corp.) and each of its future restricted subsidiaries that either borrows under, or guarantees, the Partnership’s senior secured asset-based revolving credit facility or guarantees certain of the Partnership’s other indebtedness (collectively, the “Guarantors”). The Notes and the Guarantees will be sold to the Initial Purchasers at par, and the sale will result in net proceeds (after deducting the Initial Purchasers’ discounts and commissions) to the Issuers of approximately $710.5 million. The closing of the issuance and sale of the Notes and the Guarantees is expected to occur on or about March23, 2018, subject to customary closing conditions.
The net proceeds from the issuance and sale of the Notes and the Guarantees, together with the net proceeds from a private placement of preferred units of the Partnership and borrowings under its asset-based revolving credit facility, will be used to fund the cash purchase price of the Partnership’s previously announced acquisition of all of the issued and outstanding membership interests in CDM Resource Management LLC and CDM Environmental& Technical Services LLC from Energy Transfer Partners, L.P. (the “CDM Acquisition”). If the CDM Acquisition is not completed on or prior to April30, 2018 or, if prior to such date, the contribution agreement providing for the CDM Acquisition is terminated, the Notes will be subject to special mandatory redemption at a redemption price payable in cash equal to 100.0% of the initial issue price of the Notes, plus accrued and unpaid interest to, but excluding, the date of redemption.
The Notes and the Guarantees will be issued and sold to the Initial Purchasers to an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), to Section4(2)thereunder. The Initial Purchasers intend to resell the Notes and Guarantees (i)inside the United States to persons reasonably believed to be “qualified institutional buyers,” as defined in Rule144A (“Rule144A”), under the Securities Act in private sales exempt from registration under the Securities Act in accordance with Rule144A and (ii)to non-U.S. persons to offers and sales that occur outside the United States within the meaning of Regulation S under the Securities Act (“Regulation S”) in accordance with Regulation S. The Notes and Guarantees will not initially be registered under the Securities Act or applicable state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state laws.
The Purchase Agreement contains customary representations, warranties and covenants and includes the terms and conditions for the sale of the Notes and the Guarantees, indemnification (including indemnification for liabilities under the Securities Act) and contribution obligations and other terms and conditions customary in agreements of this type. The Issuers and the Guarantors also agreed to enter into a registration rights agreement with the holders of the Notes.
Certain of the Initial Purchasers or their affiliates perform and have performed commercial and investment banking and advisory services for the Partnership from time to time for which they receive and have received customary fees and expenses. In particular, JPMorgan Chase Bank, N.A., an affiliate of J.P. Morgan Securities LLC, acts as administrative and collateral agent under our revolving credit facility and affiliates of certain of the Initial Purchasers are lenders, lead arrangers and bookrunners under our revolving credit facility. Affiliates of the Initial Purchasers have agreed to provide the Partnership with interim financing in an aggregate amount of $725 million in the event that the issuance and sale of the Notes and Guarantees is not consummated. The Initial Purchasers may, from time to time, engage in transactions with and perform services for the Partnership in the ordinary course of their business, for which they will receive fees and reimbursement for expenses.
In addition, the Issuers and the Guarantors have agreed with the Initial Purchasers not to offer, sell, contract to sell, pledge or otherwise dispose of any debt securities (other than the Notes) issued by the Issuers or any of the