Business Context and Reporting Period
Company: USA Compression Partners, LP
Filing Type: Form 8-K (Current Report)
Date of Report: January 29, 2018
Event: Entry into a Material Definitive Agreement (Fourth Amendment to Credit Agreement) to facilitate major acquisition and equity restructuring transactions.
Key Financial Metrics and Debt Status
- Outstanding Borrowings: Approximately $792.5 million under the Credit Agreement as of January 29, 2018.
- Letters of Credit: No outstanding letters of credit.
- Credit Agreement Maturity: January 2020.
- Acquisition Consideration: Approximately $1.7 billion total (consisting of partnership units and $1.225 billion in cash).
- Proposed Bridge Facility: Up to $725 million senior unsecured bridge credit facility permitted.
- Additional Indebtedness Capacity: Up to $800 million aggregate indebtedness permitted in connection with the transactions.
- Preferred Unit Issuance: $500 million in Series A Perpetual Preferred Units and warrants.
- GP Interest Sale: $250 million cash consideration for the acquisition of the General Partner interest.
Material Changes and Transaction Details
The Fourth Amendment to the Credit Agreement was executed to permit the following transactions:
- Acquisition: Acquisition of CDM Resource Management LLC and CDM Environmental & Technical Services LLC from Energy Transfer Partners, L.P. (ETP).
- Equity Restructuring: Cancellation of incentive distribution rights and conversion of the General Partner Interest into a non-economic interest in exchange for common units.
- Capital Raise: Private placement of $500 million in Series A Preferred Units and warrants to EIG Global Energy Partners and other investors.
- General Partner Sale: Sale of the General Partner interest and certain common units to Energy Transfer Equity, L.P. and affiliates for $250 million.
Covenant Changes: The minimum Availability requirement for Restricted Payments, voluntary debt prepayments, and recognition of acquisitions was increased from $20 million to $100 million.
Outlook, Risks, and Management Commentary
Management Commentary: The filing indicates the amendment was necessary to consummate the "Acquisition and Equity Transactions." The Partnership paid amendment fees to lenders and agreed to arrangement fees for the Fourth Amendment.
Risks and Contingencies: The filing does not explicitly detail new risks beyond the standard obligations of the amended credit agreement. The ability to make restricted payments or recognize acquisitions is now contingent on maintaining higher minimum availability ($100 million).
Unusual Items: The filing references a previously filed Form 8-K (January 16, 2018) for a complete description of the material terms of the acquisition and equity transactions.
Investor Verification Checklist
- Verify the final closing status of the $1.7 billion acquisition of CDM assets from Energy Transfer Partners.
- Confirm the terms and pricing of the $500 million Series A Preferred Unit private placement.
- Review the full text of the Fourth Amendment (Exhibit 10.1) for specific covenants regarding the $100 million minimum availability threshold.
- Monitor the utilization of the proposed $725 million Bridge Facility and its impact on leverage ratios.
- Check subsequent filings for the completion of the $250 million General Partner interest sale.