Business Context and Reporting Period
This Form 8-K is a current report filed by Exterran Holdings, Inc. (noting the user metadata reference to Archrock, Inc., the registrant in the text is Exterran) on September 30, 2009. The filing details a material definitive agreement entered into on October 2, 2009, regarding the contribution of compression services assets to Exterran Partners, L.P. (the Partnership), and the departure of a senior executive.
Key Financial Metrics and Transactions
- Debt Assumption: EXLP Operating will assume and repay $57.2 million of Exterran's debt as part of the transaction.
- Equity Issuance: The Partnership will issue 4,739,927 common units to MLP LP LLC and 96,601 general partner units to GP.
- Ownership Structure: Exterran holds an indirect 56% limited partner interest and a 2% general partner interest in the Partnership.
- Cost Caps: The cap on selling, general, and administrative costs allocable from Exterran to the Partnership is increased from $6.0 million to $7.6 million per quarter.
Material Changes and Agreements
The primary material change is the execution of a Contribution, Conveyance and Assumption Agreement. This agreement facilitates the transfer of specified compression services customer contracts and equipment from Exterran Energy Solutions, L.P. to the Partnership's operating entities. Additionally, the Omnibus Agreement governing the relationship between Exterran and the Partnership is being amended and restated to extend cost caps through December 31, 2010.
Outlook, Risks, and Management Commentary
- Closing Conditions: The transaction is subject to standard closing conditions, including the expiration of the Hart-Scott-Rodino Antitrust Improvements Act waiting period. Closing is expected in November 2009.
- Executive Departure: Norman A. Mckay, Senior Vice President and President of the Eastern Hemisphere of EESLP, notified the company of his resignation effective October 31, 2009, to join a non-competing oilfield services company.
- Risks: Forward-looking statements regarding the transaction are subject to uncertainties, including regulatory review results and the satisfaction of closing conditions. Actual results may differ materially from expectations.
Investor Verification Checklist
- Verify the final closing date of the asset contribution, currently expected in November 2009.
- Confirm the successful assumption of the $57.2 million debt by EXLP Operating.
- Monitor the transition of responsibilities following the resignation of Norman A. Mckay.
- Review the amended Omnibus Agreement for the new $7.6 million quarterly cost cap and its termination date of December 31, 2010.
- Check for any regulatory delays related to the Hart-Scott-Rodino Act that could impact the transaction timeline.