Business Context and Reporting Period
This Form 8-K is a current report filed by Exterran Holdings, Inc. (noting the metadata reference to Archrock, Inc., which is the successor entity) dated March 7, 2013. The filing details the entry into a Material Definitive Agreement titled the "Contribution, Conveyance and Assumption Agreement."
Key Financial Metrics and Transaction Details
The filing does not provide standard financial performance metrics such as revenue, profit, cash flow, or debt levels for a specific reporting period. Instead, it outlines the following transactional metrics:
- Asset Contribution: Conveyance of specified compression services customer contracts, compression equipment, and leased equipment from Exterran Energy Solutions, L.P. (EESLP) to Exterran Partners, L.P. (the Partnership).
- Equity Issuance: The Partnership issued 7,123,527 common units to MLP LP LLC and 144,644 general partner units to Exterran General Partner, L.P.
- Ownership Structure: Exterran Holdings holds an indirect 29% limited partner interest and approximately 2% general partner interest in the Partnership.
Material Changes and Agreement Amendments
A material change involves the amendment to the Third Amended and Restated Omnibus Agreement, which alters cost allocation caps between Exterran Holdings and the Partnership:
- SG&A Limit Increase: The cap on selling, general, and administrative costs allocated to the Partnership increases from $10.5 million per quarter to $12.5 million per quarter through December 31, 2013, and to $15.0 million per quarter beginning January 1, 2014.
- Cost of Sales Limit Increase: The cap on cost of sales allocated to the Partnership increases from $21.75 per horsepower per quarter to $22.50 per horsepower per quarter beginning January 1, 2014.
- Term Extension: The terms for the SG&A Limit, Cost of Sales Limit, and certain non-competition/equipment transfer provisions are extended by one year, terminating on December 31, 2014.
Guidance, Outlook, and Risks
Closing Timeline: The transactions are expected to close in March or April 2013, subject to standard closing conditions.
Conditions Precedent: Closing is contingent upon the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the execution of the Omnibus Agreement amendment.
Risks and Uncertainties: The filing includes forward-looking statements regarding the ability to complete the transaction. Risks include regulatory review outcomes and the failure to satisfy closing conditions. The company disclaims any obligation to update these statements.
Investor Verification Checklist
- Verify the final closing date of the Contribution Agreement (expected March/April 2013).
- Confirm the successful expiration of the Hart-Scott-Rodino antitrust waiting period.
- Review the executed amendment to the Omnibus Agreement to confirm the new SG&A and Cost of Sales caps.
- Monitor the impact of the asset contribution on the Partnership's future cash flow and distribution capabilities.
- Check subsequent filings for any changes to the 29% limited partner interest held by Exterran Holdings.