Business Context and Reporting Period
Company: Archrock, Inc. (AROC)
Filing Type: Form 8-K (Current Report)
Date of Report: October 31, 2016
Event: Entry into a Material Definitive Agreement (Contribution, Conveyance and Assumption Agreement).
Key Financial Metrics
This filing does not report revenue, profit, cash flow, margins, debt, or liquidity metrics. The document focuses on a corporate restructuring transaction.
- Transaction Value: Approximately $85 million (determined by the issuance of Common Units and general partner units).
- Unit Calculation: Number of units issued equals $85 million divided by the volume-weighted daily average price of the Partnership's common units for the 30 trading days ending one trading day prior to closing.
- Current Ownership: Archrock, Inc. holds an indirect 39% limited partner interest and an approximate 2% general partner interest in Archrock Partners, L.P. (the Partnership).
Material Changes and Transaction Details
On October 31, 2016, Archrock, Inc. entered into an agreement with its subsidiaries and the Partnership to restructure compression services assets. Key components include:
- Asset Transfer: Conveyance of specified compression services customer contracts and related equipment from Archrock Services, L.P. (OpCo) to Archrock Partners Operating LLC and Archrock Partners Leasing LLC.
- Equity Issuance: The Partnership will issue Common Units to MLP LP LLC and general partner units to Archrock General Partner, L.P.
- Omnibus Agreement Amendment: A required amendment to the existing Omnibus Agreement will extend non-competition and equipment transfer provisions until December 31, 2018, and restate customer schedules.
Guidance, Outlook, and Risks
Expected Closing: November 2016, subject to standard closing conditions.
Conditions Precedent:
- Expiration or termination of the Hart-Scott-Rodino Antitrust Improvements Act waiting period.
- Execution of the amendment to the Omnibus Agreement.
Risks and Contingencies:
- Regulatory review outcomes could prevent transaction consummation.
- Failure to satisfy closing conditions.
- Forward-looking statements regarding timing and completion are subject to uncertainties outside the company's control.
Investor Verification Checklist
- Verify the final closing date of the transaction in November 2016.
- Confirm the volume-weighted average price used to calculate the number of units issued for the $85 million value.
- Review the amended Omnibus Agreement (Exhibit 10.16 reference) for updated non-competition terms and customer lists.
- Monitor regulatory filings for any updates regarding the Hart-Scott-Rodino waiting period.
- Assess the impact of the asset transfer on the consolidated financial statements in the next quarterly report.