UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported):
April 26, 2018
ARCHROCK, INC.
(Exact name of registrant as specified in its charter)
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Delaware
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001-33666
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74-3204509
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(State or other jurisdiction
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(Commission
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(I.R.S. Employer
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of incorporation)
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File Number)
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Identification No.)
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9807 Katy Freeway, Suite 100
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Houston, Texas
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77024
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number, including area code:
(281) 836-8000
Former name or former address, if changed since last report
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
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Introductory Note
On April 26, 2018, Amethyst Merger Sub LLC, a Delaware limited liability company (“Merger Sub”) and an indirect wholly owned subsidiary of Archrock, Inc., a Delaware corporation (“Archrock”), completed its merger with and into Archrock Partners, L.P., a Delaware limited partnership (the “Partnership”), with the Partnership surviving the merger (the “Merger”) pursuant to that certain Agreement and Plan of Merger, dated as of January 1, 2018 (the “Original Merger Agreement”), as amended by Amendment No. 1 thereto, dated as of January 11, 2018 (“Amendment No. 1 to Merger Agreement” and, together with the Original Merger Agreement, the “Merger Agreement”), by and among the Partnership, Archrock, Merger Sub, Archrock General Partner, L.P., a Delaware limited partnership and the general partner of the Partnership (the “General Partner”), and Archrock GP LLC, a Delaware limited liability company and the general partner of the General Partner (the “Managing GP”). Upon consummation of the Merger, Archrock acquired all of the outstanding common units representing limited partner interests in the Partnership (“Common Units”) that Archrock and its subsidiaries did not already own.
Item 1.01
Entry into a Material Definitive Agreement.
On April 26, 2018, at effective time of the Merger (the “Effective Time”), Archrock entered into an Omnibus Joinder Agreement, dated as of April 26, 2018 (the “Joinder Agreement”), with Archrock Services, L.P., a Delaware limited partnership (“ASLP”), AROC Corp., a Delaware corporation (“AROC Corp.”), AROC Services GP LLC, a Delaware limited liability company (“AROC Services GP”), AROC Services LP LLC, a Delaware limited liability company (“AROC Services LP”), Archrock Services Leasing LLC, a Delaware limited liability company (“Archrock Services Leasing”), Archrock GP LP LLC, a Delaware limited liability company (“Archrock GP LP”), Archrock MLP LP LLC, a Delaware limited liability company (“Archrock MLP”), and the Administrative Agent (as defined below) and the lenders party thereto.
Pursuant to the Joinder Agreement: (i) Archrock was added as Parent under, and as defined in, that certain Credit Agreement, dated as of March 30, 2017 (the “Original Credit Agreement”), as amended by Amendment No. 1 thereto, dated as of February 23, 2018 (“Amendment No. 1 to Credit Agreement” and, together with the Original Credit Agreement, the “Credit Agreement”), by and among the Partnership, Archrock Partners Finance Corp., a Delaware corporation, and Archrock Partners Leasing LLC, a Delaware limited liability company, as guarantors, Archrock Partners Operating LLC, a Delaware limited liability company (“Operating LLC”), as borrower, JPMorgan Chase Bank, N.A., as administrative agent (the “Administrative Agent”), (ii) Archrock and AROC Corp., AROC Services GP, AROC Services LP, Archrock Services Leasing, Archrock GP LP, and Archrock MLP, each subsidiaries of Archrock, were added as guarantors under the Credit Agreement, and (iii) ASLP was added as a borrower and as the administrative borrower under the Credit Agreement (the “Administrative Borrower”). ASLP and Operating LLC are hereinafter referred to as the “Borrowers.”
The Credit Agreement provides for an asset-based revolving credit facility available to the Borrowers in an aggregate amount of $1.25 billion (the “Credit Facility”). The Credit Facility will mature on March 30, 2022, except that if as of December 2, 2020 any portion of the Partnership’s existing Senior Notes due April 2021 are outstanding on such date, then the Credit Facility will instead mature on December 2, 2020. The Borrowers’ obligations under the Credit Facility will be guaranteed by Archrock and all of its Significant Domestic Subsidiaries (as defined in the Credit Agreement). In addition, the Borrowers’ obligations under the Credit Facility will be secured by (1) substantially all of Archrock’s assets and substantially all of the assets of the Borrowers and Archrock’s Significant Domestic Subsidiaries, excluding real property and other customary exclusions, and (2) all of the equity interests of Archrock’s U.S. restricted subsidiaries (subject to customary exceptions) and 65% of the voting equity interests in certain of Archrock’s first-tier foreign subsidiaries pursuant to an Amendment and Supplement to Pledge and Security Agreement (“Security Agreement Supplement”).
The Borrowers will have the ability to request the issuance of letters of credit under the Credit Facility in an aggregate amount of up to $50 million. Subject to certain conditions, at the Borrowers’ request and with the consent of the participating lenders, the total commitments under the Credit Facility may be increased from time to time by an aggregate amount of up to $250 million.
The borrowing base under the Credit Facility will equal (a) 85% of eligible accounts receivable of ASLP and each subsidiary of ASLP that is a guarantor (collectively, the “Borrowing Base Parties”), plus (b) the product of 85% multiplied by the net orderly liquidation value percentage identified in the most recent inventory appraisal ordered by the Administrative Agent multiplied by the Borrowing Base Parties’ eligible inventory (valued at the lower of cost or net realizable value), plus (c) the lesser of (i) 95% of the net book value of the Borrowing Base Parties’ eligible compression units (with depreciation calculated in accordance with GAAP as in effect on the closing date of the Credit Agreement) and (ii) the product of 80% multiplied by the net orderly liquidation value percentage identified in the most recent appraisal ordered by the Administrative Agent multiplied by the net book value of the Borrowing Base Parties’ eligible compression units (with depreciation calculated in accordance with GAAP as in effect on the closing date of the Credit Agreement), plus (d) 80% of the net book value of the Borrowing Base Parties’ eligible new compression units (with depreciation calculated in accordance with GAAP as in effect on the closing date of the Credit Agreement), less (e) reserves established by the Administrative Agent in its permitted discretion.
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Borrowings under the Credit Facility will bear interest at a per annum interest rate equal to, at the Administrative Borrower’s option, either the Alternate Base Rate or LIBOR plus the applicable margin. “Alternate Base Rate” means the greatest of (a) the prime rate, (b) the federal funds effective rate plus 0.50% and (c) one-month LIBOR plus 1.00%. The applicable margin for borrowings varies (i) in the case of LIBOR loans, from 2.00% to 3.25% per annum and (ii) in the case of Base Rate loans, from 1.00% to 2.25% per annum, and will be determined based on a total leverage ratio pricing grid. In addition, the Borrowers are required to pay commitment fees based on the daily unused amount of the Credit Facility in an amount per annum equal to an applicable percentage, which ranges from 0.375% to 0.50% and is determined based on a total leverage ratio pricing grid. Amounts borrowed and repaid under the Credit Facility may be re-borrowed, subject to Borrowing Base availability.
The Credit Agreement contains various covenants with which Archrock, the Borrowers and their respective restricted subsidiaries must comply, including, but not limited to, limitations on the incurrence of indebtedness, investments, liens on assets, repurchasing equity and making distributions, transactions with affiliates, mergers, consolidations, dispositions of assets and other provisions customary in similar types of agreements. Archrock must also maintain, on a consolidated basis, as of the last day of each period of four consecutive fiscal quarters a Total Leverage Ratio (as defined in the Credit Agreement) of not greater than 5.95:1.00 through the fourth fiscal quarter of 2018; 5.75:1.00 from the first fiscal quarter of 2019 through the fourth fiscal quarter of 2019; 5.50:1.00 in the first and second fiscal quarters of 2020, and 5.25:1.00 thereafter (except that the Total Leverage Ratio for any fiscal quarter ending after June 30, 2020 during which a Specified Acquisition (as defined in the Credit Agreement) occurs and the following two fiscal quarters shall instead not be greater than 5.50:1.00), an Interest Coverage Ratio (as defined in the Credit Agreement) of not less than 2.50:1.00 and a Senior Secured Leverage Ratio (as defined in the Credit Agreement) of not greater than 3.50:1.00. The Credit Agreement also contains various customary representations and warranties, affirmative covenants and events of default.
Proceeds under the Credit Facility have been used to repay in full the obligations under that certain Credit Agreement, dated July 10, 2015 (as amended, the “Prior Credit Agreement”), among Archrock, as parent, ASLP, as borrower, Wells Fargo Bank, National Association, as administrative agent, and the lenders from time to time party thereto, and commitments under the Prior Credit Agreement have been terminated. The Borrowers may also use proceeds under the Credit Facility to pay fees and expenses in connection with the Credit Agreement, finance working capital needs, for general company purposes and for any other purpose not prohibited by the terms of the Credit Agreement.
The foregoing description of the Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Original Credit Agreement, which is filed as Exhibit 10.1 to the Partnership’s Current Report on Form 8-K filed the Securities and Exchange Commission (the “SEC”) on April 5, 2017, and Amendment No. 1 to Credit Agreement, which is filed as Exhibit 10.1 to the Partnership’s Current Report on Form 8-K filed the SEC on February 28, 2018, each of which is incorporated herein by reference.
The foregoing description of the Joinder Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Joinder Agreement, a copy of which is filed as Exhibit 10.3 to this Current Report on Form 8-K, and is incorporated herein by reference.
The foregoing description of the Security Supplement Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Security Supplement Agreement, a copy of which is filed as Exhibit 10.4 to this Current Report on Form 8-K, and is incorporated herein by reference.
Item 1.02
Termination of a Material Definitive Agreement.
In connection with the transactions described in Item 1.01 above, on April 26, 2018, Archrock paid in full all outstanding obligations under the Prior Credit Agreement. The Prior Credit Agreement and the description thereof are incorporated by reference to Archrock’s Current Report on Form 8-K filed on July 16, 2015 and Exhibit 10.2 thereto. The First Amendment to the Prior Credit Agreement, dated October 5, 2015, is incorporated by reference to Exhibit 10.4 of Archrock’s Current Report on Form 8-K filed on October 6, 2015. The Second Amendment, Consent and Waiver to the Prior Credit Agreement, dated May 10, 2016, is incorporated by reference to Exhibit 10.1 of Archrock’s Current Report on Form 8-K filed on May 11, 2016. The Third Amendment, Consent and Waiver to the Prior Credit Agreement, dated July 21, 2016, is incorporated by reference to Exhibit 10.1 of Archrock’s Current Report on Form 8-K filed on July 26, 2016. The Fourth Amendment, Consent and Waiver to the Prior Credit Agreement, dated September 21, 2016, is incorporated by reference to Exhibit 10.1 of Archrock’s Current Report on Form 8-K filed on September 22, 2016. The Fifth Amendment, Consent and Waiver to the Prior Credit Agreement, dated December 9, 2016, is incorporated by reference to Exhibit 10.1 of Archrock’s Current Report on Form 8-K filed on December 12, 2016.
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Item 2.01
Completion of Acquisition or Disposition of Assets.
The disclosure set forth under “Introductory Note” above is incorporated in this Item 2.01 by reference.
Pursuant to the Merger Agreement, at the Effective Time, each outstanding Common Unit was converted into the right to receive 1.40 shares of common stock of Archrock, par value $0.01 per share (“Archrock Common Stock” and such amount, the “Merger Consideration”), other than Common Units that were owned immediately prior to the Effective Time of the Merger by Archrock or its subsidiaries, which remain outstanding, unaffected by the Merger. No fractional shares of Archrock Common Stock will be issued in the Merger; instead, all fractions of Archrock Common Stock to which a holder of Common Units otherwise would have been entitled will be aggregated and the resulting fraction will be rounded up to the nearest whole share of Archrock Common Stock. In connection with the Merger, all of the Partnership’s incentive distribution rights, which were owned indirectly by Archrock, were canceled and cease to exist.
At the Effective Time, each award of phantom units of the Partnership (“Partnership Phantom Units”) (whether vested or unvested) that was outstanding as of immediately prior to the Effective Time was assumed by Archrock and converted into an award of restricted stock units of Archrock (“Archrock RSUs”) granted under Archrock’s 2013 Stock Incentive Plan representing a number of shares of Archrock Common Stock equal to (i) the number of Partnership Phantom Units subject to such award as of immediately prior to the Effective Time, multiplied by (ii) 1.40, rounded down to the nearest whole Archrock RSU. Each such award of Archrock RSUs shall be subject to the same vesting, forfeiture and other terms and conditions (including form(s) of payment and distribution equivalent rights, if any) applicable to the converted award of Partnership Phantom Units as of immediately prior to the Effective Time.
Pursuant to the Merger Agreement, Archrock issued approximately 57.8 million shares of Archrock Common Stock to the holders of Common Units (other than Archrock and its subsidiaries) as the Merger Consideration as described above.
The description of the Merger Agreement in this Current Report on Form 8-K does not purport to be complete and is qualified in its entirety by reference to the full text of the Original Merger Agreement, which is filed as Exhibit 2.1 to Archrock’s Current Report on Form 8-K filed the SEC on January 2, 2018, and Amendment No. 1 to Merger Agreement, a copy of which is attached as Exhibit 2.2 to Archrock’s Current Report on Form 8-K filed on January 16, 2018, each of which is incorporated herein by reference.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The description of Amendment No. 1 to Credit Agreement contained in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.03.
Item 7.01
Regulation FD Disclosure.
On April 26, 2018, Archrock and the Partnership issued a joint press release announcing the completion of the Merger. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The information furnished pursuant to this Item 7.01, including Exhibit 99.1, shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and will not be incorporated by reference into any filing under the Exchange Act or the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference.
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Item 9.01
Financial Statements and Exhibits.
(d) Exhibits
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Exhibit
Number
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Description
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2.1*
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Agreement and Plan of Merger, dated as of January 1, 2018, by and among Archrock, Inc., Archrock GP LLC, Archrock General Partner, L.P. and Archrock Partners, L.P., incorporated by reference to Exhibit 2.1 of Archrock’s Current Report on Form 8-K filed on January 2, 2018.
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2.2
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Amendment No. 1 to Agreement and Plan of Merger, dated as of January 11, 2018, by and among Archrock, Inc., Archrock GP LLC, Archrock General Partner, L.P., Archrock Partners, L.P. and Amethyst Merger Sub LLC, incorporated by reference to Exhibit 2.2 of Archrock’s Current Report on Form 8-K filed on January 16, 2018.
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10.1
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Credit Agreement, dated as of March 30, 2017, among Archrock Partners Operating LLC, as Borrower, the other Loan Parties party thereto, the Lenders party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent for the Lenders, as an Issuing Bank and as Swingline Lender, incorporated by reference to Exhibit 10.1 to the Partnership’s Current Report on Form 8-K filed on April 5, 2017.
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10.2
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Amendment No. 1 to Credit Agreement, dated as of February 23, 2018, by and among Archrock Partners, L.P., the other Loan Parties thereto, the Lenders thereto, and JPMorgan Chase Bank, N.A., as the Administrative Agent, incorporated by reference to Exhibit 10.1 to the Partnership’s Current Report on Form 8-K filed on February 28, 2018.
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10.3
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Omnibus Joinder Agreement, dated as of April 26, 2018, by and among Archrock, Inc., Archrock Services, L.P., AROC Corp., AROC Services GP LLC, AROC Services LP LLC, Archrock Services Leasing LLC, Archrock GP LP LLC, and Archrock MLP LP LLC and acknowledged and accepted by JPMorgan Chase Bank, N.A., as the Administrative Agent.
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10.4
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Amendment and Supplement to Pledge and Security Agreement dated as of April 26, 2018, by and among Archrock Partners Operating LLC, Archrock Partners, L.P., Archrock Partners Finance Corp., Archrock Partners Leasing LLC, Archrock, Inc., Archrock Services, L.P., AROC Corp., AROC Services GP LLC, AROC Services LP LLC, Archrock Services Leasing LLC, Archrock GP LP LLC, Archrock MLP LP LLC and JPMorgan Chase Bank, N.A., as the Administrative Agent.
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99.1
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Press Release dated April 26, 2018.
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The schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K and will be provided to the SEC upon request.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized
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ARCHROCK, INC.
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April 26, 2018
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By:
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/s/ Stephanie C. Hildebrandt
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Stephanie C. Hildebrandt
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Senior Vice President, General Counsel and Secretary
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Exhibit 10.3
EXECUTION VERSION
OMNIBUS JOINDER AGREEMENT
THIS OMNIBUS JOINDER AGREEMENT (this “
Agreement
”), dated as of April 26, 2018, is entered into among
Archrock Services, L.P., a Delaware limited partnership (“
ASLP
”), Archrock, Inc., a Delaware Corporation (“
AROC
”), AROC Corp., a Delaware corporation (“
AROC Corp.
”), AROC Services GP LLC, a Delaware limited liability company (“
AROC Services GP
”), AROC Services LP LLC, a Delaware limited liability company (“
AROC Services LP
”), Archrock Services Leasing LLC, a Delaware limited liability company (“
Archrock Services Leasing
”), Archrock GP LP LLC, a Delaware limited liability company (“
Archrock GP
”), Archrock MLP LP LLC, a Delaware limited liability company (“
Archrock MLP
”, and together with ASLP, AROC, AROC Corp., AROC Services GP, AROC Services LP, Archrock Services Leasing and Archrock GP, the “
New Loan Parties
”) and JPMORGAN CHASE BANK, N.A., in its capacity as administrative agent (the “
Administrative Agent
”) under that certain Credit Agreement dated as of March 30, 2017 (as amended by Amendment No. 1 to Credit Agreement, dated as of February 23, 2018 and as it may be amended, modified, extended or restated from time to time, the “
Credit Agreement
”) among Archrock Partners Operating LLC, as Borrower, the other Loan Parties party thereto, the Lenders party thereto and the Administrative Agent for the Lenders. All capitalized terms used herein and not otherwise defined herein shall have the meanings set forth in the Credit Agreement.
The New Loan Parties and the Administrative Agent, for the benefit of the Lenders, hereby agree as follows:
1.
Each of the New Loan Parties hereby acknowledges, agrees and confirms that, by its execution of this Agreement, such New Loan Party will be deemed to be a Loan Party under the Credit Agreement and a “
Loan Guarantor
” for all purposes of the Credit Agreement and shall have all of the obligations of a Loan Party and a Loan Guarantor thereunder as if it had executed the Credit Agreement. Each of the New Loan Parties hereby ratifies, as of the date hereof, and agrees to be bound by, all of the terms, provisions and conditions contained in the Credit Agreement, including without limitation (a) all of the representations and warranties of the Loan Parties set forth in
Article III
of the Credit Agreement, (b) all of the covenants set forth in
Articles
V and
VI
of the Credit Agreement and (c) all of the guaranty obligations set forth in
Article X
of the Credit Agreement. Without limiting the generality of the foregoing terms of this
paragraph 1
, each of the New Loan Parties, subject to the limitations set forth in
Sections 10.09
and
10.12
of the Credit Agreement, hereby guarantees, jointly and severally with the other Loan Guarantors, to the Administrative Agent and the Lenders, as provided in
Article X
of the Credit Agreement, the prompt payment and performance of the Guaranteed Obligations in full when due (whether at stated maturity, as a mandatory prepayment, by acceleration or otherwise) strictly in accordance with the terms thereof and agrees that if any of the Guaranteed Obligations are not paid or performed in full when due (whether at stated maturity, as a mandatory prepayment, by acceleration or otherwise), each of the New Loan Parties will, jointly and severally together with the other Loan Guarantors, promptly pay and perform the same, without any demand or notice whatsoever, and that in the case of any extension of time of payment or renewal of any of the Guaranteed Obligations, the same will be promptly paid in full when due (whether at extended maturity, as a mandatory prepayment, by acceleration or otherwise) in accordance with the terms of such extension or renewal. Each of the New Loan Parties represents and warrants that the supplements to the Schedules to the Credit Agreement attached hereto as
Exhibit A
are true and correct in all respects and such supplements set forth all information required to be scheduled under the Credit Agreement.
2.
ASLP further acknowledges, agrees and confirms that, by its execution of this Agreement, ASLP will be deemed to be a “
Borrower
” and the “
Administrative Borrower
” for all purposes of the Credit Agreement and shall have all of the obligations of a Borrower and the Administrative
Borrower thereunder as if it had executed the Credit Agreement. ASLP hereby ratifies, as of the date hereof, and agrees to be bound by, all of the terms, provisions and conditions contained in the Credit Agreement, including without limitation, all of the payment and performance obligations of a Borrower set forth in
Article II
of the Credit Agreement and all of the obligations relating to the Administrative Borrower set forth in
Section 2.24
of the Credit Agreement.
3.
AROC further acknowledges, agrees and confirms that, by its execution of this Agreement, AROC will be deemed to be “
Parent
” for all purposes of the Credit Agreement and shall have all of the obligations of Parent thereunder as if it had executed the Credit Agreement.
4.
Each of the New Loan Parties is, simultaneously with the execution of this Agreement, executing and delivering the Amendment and Supplement to Pledge and Security Agreement dated as of the date hereof, by and among the Grantors (as defined therein) and the Administrative Agent.
5.
The address of each of the New Loan Parties for purposes of
Section 9.01
of the Credit Agreement is as follows:
9807 Katy Freeway, Suite 100
Houston, Texas 77024
Attention:
Treasurer
Facsimile No:
(281) 836-8949
With a copy to:
General Counsel
Facsimile No: (281) 836-8953
6.
Each of the New Loan Parties hereby waives acceptance by the Administrative Agent and the Lenders of the guaranty by such New Loan Party upon the execution of this Agreement by such New Loan Party.
7.
This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all of which shall constitute one and the same instrument.
8.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, each of the New Loan Parties has caused this Agreement to be duly executed by its authorized officer, and the Administrative Agent, for the benefit of the Lenders, has caused the same to be accepted by its authorized officer, as of the day and year first above written.
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ARCHROCK SERVICES, L.P.
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By:
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/s/ D. Bradley Childers
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Name
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D. Bradley Childers
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Title
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President and Chief Executive Officer
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ARCHROCK, INC.
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By:
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/s/ D. Bradley Childers
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Name
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D. Bradley Childers
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Title
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President and Chief Executive Officer
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AROC CORP.
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By:
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/s/ D. Bradley Childers
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Name
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D. Bradley Childers
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Title
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President and Chief Executive Officer
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AROC SERVICES GP LLC
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By:
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/s/ D. Bradley Childers
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Name
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D. Bradley Childers
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Title
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President and Chief Executive Officer
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AROC SERVICES LP LLC
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By:
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/s/ D. Bradley Childers
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Name
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D. Bradley Childers
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Title
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President and Chief Executive Officer
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Signature Page to Omnibus Joinder Agreement
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ARCHROCK SERVICES LEASING LLC
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By:
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/s/ D. Bradley Childers
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Name
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D. Bradley Childers
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Title
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President and Chief Executive Officer
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ARCHROCK GP LP LLC
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By:
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/s/ Pamela Jasinski
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Name
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Pamela Jasinski
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Title
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Manager
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ARCHROCK MLP LP LLC
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By:
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/s/ Pamela Jasinski
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Name
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Pamela Jasinski
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Title
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Manager
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Signature Page to Omnibus Joinder Agreement
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Acknowledged and accepted:
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JPMORGAN CHASE BANK
,
N.A
., as Administrative Agent
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By:
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/s/ Anca Loghin
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Name:
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Anca Loghin
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Title:
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Authorized Officer
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Signature Page to Omnibus Joinder Agreement
Exhibit 10.4
EXECUTION VERSION
AMENDMENT AND SUPPLEMENT TO PLEDGE AND SECURITY AGREEMENT
THIS AMENDMENT AND SUPPLEMENT TO PLEDGE AND SECURITY AGREEMENT, dated as of April 26, 2018 (this “
Amendment and Supplement
”), is entered into among Archrock Partners Operating LLC, a Delaware limited liability company (“
Archrock Partners Operating
”), Archrock Partners, L.P., a Delaware limited partnership (“
APLP
”), Archrock Partners Finance Corp., a Delaware corporation (“
Archrock Partners Finance
”), Archrock Partners Leasing LLC, a Delaware limited liability company (“
Archrock Partners Leasing
”, and together with Archrock Partners Operating, APLP and Archrock Partners Finance, the “
Initial Grantors
”), Archrock Services, L.P., a Delaware limited partnership (“
ASLP
”), Archrock, Inc., a Delaware Corporation (“
AROC
”), AROC Corp., a Delaware corporation (“
AROC Corp.
”), AROC Services GP LLC, a Delaware limited liability company (“
AROC Services GP
”), AROC Services LP LLC, a Delaware limited liability company (“
AROC Services LP
”), Archrock Services Leasing LLC, a Delaware limited liability company (“
Archrock Services Leasing
”), Archrock GP LP LLC, a Delaware limited liability company (“
Archrock GP
”), Archrock MLP LP LLC, a Delaware limited liability company (“
Archrock MLP
”, and together with ASLP, AROC, AROC Corp., AROC Services GP, AROC Services LP, Archrock Services Leasing and Archrock GP, the “
New Grantors
”, and together with the Initial Grantors, the “
Grantors
”), and JPMorgan Chase Bank, N.A., in its capacity as the administrative agent for the lenders (“
Lenders
”) party to the Credit Agreement referred to below (the “
Administrative Agent
”). Capitalized terms used herein and not otherwise defined shall have the meanings ascribed thereto in the Security Agreement (as defined below).
RECITALS
A.
The Initial Grantors and the Administrative Agent are parties to (i) that certain Credit Agreement, dated as of March 30, 2017 (as amended by the Amendment No. 1 (as defined below) and as it may be amended, modified, extended or restated from time to time, the “
Credit Agreement
”) and (ii) that certain Pledge and Security Agreement, dated as of March 30, 2017 (as it may be amended, modified, extended or restated from time to time, the “
Security Agreement
”), pursuant to which, among other things, each of the Initial Grantors granted a security interest in the Collateral described therein to the Administrative Agent on behalf of and for the ratable benefit of the Secured Parties (as defined in the Credit Agreement).
B.
The Initial Grantors, the Lenders party thereto and the Administrative Agent entered into that certain Amendment No. 1 to Credit Agreement, dated of even date herewith (“
Amendment No. 1
”), pursuant to which, among other things, the New Grantors became Loan Parties under the Credit Agreement on the Additional Amendments Effective Date (as defined therein).
C.
The parties hereto have agreed to amend the Security Agreement as provided for herein, and this Amendment and Supplement is permitted to be executed by the Administrative Agent and the Grantors in accordance with
Section 8.7
of the Security Agreement.
D.
Pursuant to
Section 5.14
of the Credit Agreement and
Section 4.15
of the Security Agreement, each of the New Grantors is required to become a Grantor under the Security Agreement.
E.
In consideration of the agreements hereinafter set forth, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows.
AGREEMENT
1.
Amendments to Security Agreement
.
(a)
The phrase “Such Grantor will provide to the Administrative Agent in accordance with the timeframe set forth in Section 5.15 of the Credit Agreement” set forth in Section 4.13 of the Security Agreement is hereby replaced in its entirety with the following phrase:
“Such Grantor will promptly (or, if applicable, in accordance with the timeframe set forth in Section 5.16 of the Credit Agreement) provide to the Administrative Agent”
(b)
Section 7.1(a) of the Security Agreement is hereby replaced in its entirety to read as follows:
“To the extent not delivered on the Amendment No. 1 Additional Amendments Effective Date, not later than ninety (90) days (or such longer period as the Administrative Agent may agree in its sole discretion) after the Amendment No. 1 Additional Amendments Effective Date, each Grantor shall execute and deliver to the Administrative Agent Deposit Account Control Agreements for each Deposit Account (other than any Excluded Account) maintained by such Grantor into which all cash, checks or other similar payments relating to or constituting payments made in respect of Receivables will be deposited (each, a “
Collateral Deposit Account
”), which Collateral Deposit Accounts are identified as such on
Exhibit B
. After the Effective Date, each Grantor will comply with the terms of
Section 7.2
.”
(c)
The first sentence of Section 7.1(b) of the Security Agreement is hereby replaced in its entirety to read as follows:
“(b) Each Grantor shall direct all of its Account Debtors to forward payments directly to Collateral Deposit Accounts, unless such payment is otherwise permitted to be made to an Excluded Account.”
(d)
Each reference to “Section 2.18” in Section 7.3 of the Security Agreement is hereby replaced with “Section 2.19”.
(e)
The reference to “Section 2.10(b)” in Section 7.3 of the Security Agreement is hereby replaced with “Section 2.11(b)”.
(f)
Section 7.4 of the Security Agreement is hereby replaced in its entirety to read as follows:
“7.4 Notwithstanding anything to the contrary herein, in any other Loan Document, or in any Deposit Account Control Agreement, Securities Account Control Agreement or Commodity Account Control Agreement entered into pursuant to the requirements of the Loan Documents, the Administrative Agent hereby agrees that it will not deliver any “Access Termination Notice” or “Disposition Instructions” or any equivalent notice of exclusive control, or otherwise exercise any equivalent rights, in each case under any Deposit Account Control Agreement, Securities Account Control Agreement or Commodity Account Control Agreement unless, in any such case, (x) an Event of Default has occurred and is continuing or (y) a Cash Dominion Trigger Period has occurred and is continuing.”
2
2.
Supplement to Security Agreement
. By its execution below, each of the New Grantors agrees to become, and does hereby become, a Grantor under the Security Agreement and agrees to be bound by such Security Agreement as if originally a party thereto. Each of the New Grantors hereby pledges, assigns and grants to the Administrative Agent, on behalf of and for the ratable benefit of the Secured Parties, a security interest in all of such New Grantor’s right, title and interest in and to the Collateral, whether now owned or hereafter acquired, to secure the prompt and complete payment and performance of the Secured Obligations.
By its execution below, each of the New Grantors represents and warrants as to itself that all of the representations and warranties contained in the Security Agreement are true and correct in all respects as of (and as though made on) the date hereof. Each of the New Grantors represents and warrants that the supplements to the Exhibits to the Security Agreement attached hereto as
Exhibit A
are true and correct in all respects and such supplements set forth all information required to be scheduled under the Security Agreement. The New Grantor shall take all steps necessary to perfect, in favor of the Administrative Agent, a first-priority security interest in and lien against such New Grantor’s Collateral, including, without limitation, delivering all certificated Pledged Collateral to the Administrative Agent (and other Collateral required to be delivered under the Security Agreement), and taking all steps necessary to properly perfect the Administrative Agent’s interest in any uncertificated Pledged Collateral.
3.
Effectiveness; Conditions Precedent
. This Amendment and Supplement shall be effective upon receipt by the Administrative Agent of counterparts of this Amendment and Supplement executed by each of the Initial Grantors, each of the New Grantors and the Administrative Agent.
4.
Reaffirmation
. Except as specifically amended by this Amendment and Supplement, all of the terms and conditions of the Security Agreement and of each of the other Collateral Documents (as defined in the Credit Agreement) shall remain in full force and effect. Each Initial Grantors hereby ratifies, confirms, and reaffirms all of the representations, warranties and covenants contained therein. All liens and security interests created and granted by the Security Agreement before this Amendment and Supplement shall continue to exist, remain valid and subsisting, shall not be impaired or released hereby, shall remain in full force and effect and are hereby ratified, affirmed, extended and conveyed as continuing security for the Secured Obligations (as defined in the Credit Agreement).
5.
Security Agreement Supplement
. For the avoidance of doubt, for all purposes of the Security Agreement and Credit Agreement, this Amendment and Supplement shall be treated as a Security Agreement Supplement, and no additional Assumption Agreement under Section 4.15 of the Security Agreement is needed for each New Grantor to be added as a party to the Security Agreement.
6.
Counterparts/Telecopy
. This Amendment and Supplement may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all of which shall constitute one and the same instrument. Delivery of executed counterparts of this Amendment and Supplement by telecopy or other secure electronic format (.pdf) shall be effective as an original.
3
7.
GOVERNING LAW
. THIS AMENDMENT AND SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF TEXAS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
4
IN WITNESS WHEREOF, the parties hereto have caused this Amendment and Supplement to be duly executed as of the date first above written.
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INITIAL GRANTORS:
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ARCHROCK PARTNERS OPERATING LLC
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By:
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/s/ D. Bradley Childers
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Name:
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D. Bradley Childers
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Title:
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President and Chief Executive Officer
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ARCHROCK PARTNERS, L.P.
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By:
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/s/ D. Bradley Childers
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Name:
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D. Bradley Childers
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Title:
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President and Chief Executive Officer
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ARCHROCK PARTNERS FINANCE CORP.
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By:
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/s/ D. Bradley Childers
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Name:
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D. Bradley Childers
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Title:
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President and Chief Executive Officer
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ARCHROCK PARTNERS LEASING LLC
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By:
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/s/ D. Bradley Childers
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Name:
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D. Bradley Childers
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Title:
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President and Chief Executive Officer
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NEW GRANTORS:
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ARCHROCK SERVICES, L.P.
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By:
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/s/ D. Bradley Childers
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Name:
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D. Bradley Childers
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Title:
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President and Chief Executive Officer
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ARCHROCK, INC.
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By:
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/s/ D. Bradley Childers
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Name:
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D. Bradley Childers
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Title:
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President and Chief Executive Officer
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Signature Page to Amendment and Supplement to Pledge and Security Agreement
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AROC CORP.
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By:
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/s/ D. Bradley Childers
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Name:
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D. Bradley Childers
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Title:
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President and Chief Executive Officer
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AROC SERVICES GP LLC
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By:
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/s/ D. Bradley Childers
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Name:
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D. Bradley Childers
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Title:
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President and Chief Executive Officer
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AROC SERVICES LP LLC
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By:
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/s/ D. Bradley Childers
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Name:
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D. Bradley Childers
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Title:
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President and Chief Executive Officer
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ARCHROCK SERVICES LEASING LLC
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By:
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/s/ D. Bradley Childers
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Name:
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D. Bradley Childers
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Title:
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President and Chief Executive Officer
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ARCHROCK GP LP LLC
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By:
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/s/ Pamela Jasinski
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Name:
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Pamela Jasinski
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Title:
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Manager
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ARCHROCK MLP LP LLC
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By:
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/s/ Pamela Jasinski
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Name:
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Pamela Jasinski
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Title:
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Manager
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Signature Page to Amendment and Supplement to Pledge and Security Agreement
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ADMINISTRATIVE AGENT:
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JPMorgan Chase Bank, N.A.
, as Administrative Agent
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By:
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/s/ Anca Loghin
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Name:
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Anca Loghin
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Title:
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Authorized Officer
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Signature Page to Amendment and Supplement to Pledge and Security Agreement
Exhibit 99.1
For information, contact:
Paul Burkhart, Vice President Finance
281-836-8688
Investor.relations@archrock.com
Archrock, Inc. Announces Completion of Merger Transaction
HOUSTON, April 26, 2018 — Archrock, Inc. (“Archrock”) (NYSE: AROC) today announced that it has completed the acquisition of all outstanding common units of Archrock Partners, L.P. (“Archrock Partners”) (NASDAQ:APLP) that did not previously own. As a result of the transaction, Archrock Partners common units will no longer be publicly traded on the Nasdaq Global Select Market after April 26, 2018.
“Archrock Partners’ unitholders and Archrock’s stockholders demonstrated strong support for the merger transaction in yesterday’s vote,” stated Brad Childers, Archrock’s President and Chief Executive Officer. “The merger strengthens our platform to capture growth from increasing U.S. natural gas production, and provides stockholders with enhanced value through a higher expected dividend growth rate and improved dividend coverage.”
Merger Transaction Highlights
Under the terms of the merger agreement, Archrock has acquired all of the 41 million outstanding units of Archrock Partners that it did not already own at a fixed exchange ratio of 1.40 shares of Archrock common stock for each Archrock Partners common unit.
Archrock expects the following benefits from the merger:
·
Simplified capital structure that accelerates deleveraging from increased retained cash flow and elimination of incentive distribution rights;
·
Cash available for dividend coverage above 2.00x through 2020;
·
10-15 percent targeted annual dividend growth through 2020;
·
Immediately accretive to Archrock’s cash available for dividend per share;
·
Lower cost of capital and improved trading liquidity; and
·
No cash federal income taxes through at least 2023.
About Archrock
Archrock, Inc. is a pure-play U.S. natural gas contract compression services business and a leading supplier of aftermarket services to customers that own compression equipment in the United States. Archrock is headquartered in Houston, Texas, operating in the major oil and gas producing regions in the United States, with approximately 1,700 employees. For more information, visit www.archrock.com.
Forward-Looking Statements
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 the control of Archrock and Archrock Partners, which could cause actual results to differ materially from such statements. Forward-looking information includes, but is not limited to: statements regarding the expected benefits of the merger transaction to Archrock and Archrock Partners and their stockholders and unitholders, respectively.
While Archrock and Archrock Partners believe 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 their businesses. Among the factors that could cause results to differ materially from those indicated by such forward-looking statements are: the failure to realize the anticipated costs savings, synergies and other benefits of the merger; local, regional and national economic conditions and the impact they may have on Archrock, Archrock Partners 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; the financial condition of Archrock’s and Archrock Partners’ customers; any non-performance by customers of their contractual obligations; changes in customer, employee or supplier relationships resulting from the transaction; changes in safety, health, environmental and other regulations; the results of any reviews, investigations or other proceedings by government authorities; the results of any shareholder actions that may be filed relating to the restatement of Archrock’s financial statements; the potential additional costs relating to Archrock’s restatement, cost-sharing with Exterran Corporation and to addressing any reviews, investigations or other proceedings by government authorities or shareholder actions; and the performance of Archrock Partners.
These forward-looking statements are also affected by the risk factors, forward-looking statements and challenges and uncertainties described in each of Archrock’s and Archrock Partners’ Annual Reports on Form 10-K for the year ended December 31, 2017, and those set forth from time to time in each party’s filings with the Securities and Exchange Commission, which are available at www.archrock.com. Except as required by law, Archrock and Archrock Partners 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.
SOURCE: Archrock, Inc.