Item 1.01
Entry into a Material Definitive Agreement
Purchase Agreement
On March 7, 2019, Archrock Partners, L.P. (the “Partnership”) and its wholly owned subsidiary, Archrock Partners Finance Corp. (“Finance Corp.” and, together with the Partnership, the “Issuers”), and Archrock, Inc., as parent guarantor (the “Parent”), and the other subsidiary guarantors thereto (together with Parent, the “Guarantors”), entered into a purchase agreement (the “Purchase Agreement”) with J.P. Morgan Securities LLC, as representative of the initial purchasers listed in Schedule 1 thereto (the “Initial Purchasers”), with respect to a private offering (the “Notes Offering”) by the Issuers of $500,000,000 aggregate principal amount of their
6.875% Senior Notes due 2027 (the “Notes”), along with the related guarantees (the “Guarantees”) of the Notes. The Notes Offering is expected to close on or about March 21, 2019, in accordance with the terms of the Purchase Agreement.
The Notes and the Guarantees were issued and sold to the Initial Purchasers pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 4(a)(2) thereunder. The Initial Purchasers intend to resell the Notes and Guarantees (i) inside the United States to “qualified institutional buyers,” as defined in Rule 144A (“Rule 144A”) under the Securities Act in private sales exempt from registration under the Securities Act in accordance with Rule 144A, and (ii) to other eligible purchasers pursuant to offers and sales that occur outside the United States within the meaning of Regulation S under the Securities Act (“Regulation S”) in accordance with Regulation S. The Notes and Guarantees have not been registered under the Securities Act or applicable state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state laws.
The issue price for the Notes and Guarantees was 100% of their principal amount. The Partnership intends to use the approximately $491 million of net proceeds of the Offering, after deducting discounts and estimated offering expenses, to redeem the Partnership’s 6.000% senior notes due 2021 (the “2021 Notes”) and partially repay outstanding borrowings under its revolving credit facility.
The Purchase Agreement contains customary representations, warranties and covenants and includes the terms and conditions for the sale of the Notes, indemnification (including indemnification for liabilities under the Securities Act) and contribution obligations and other terms and conditions customary in agreements of this type.
Certain of the Initial Purchasers or their affiliates perform and have performed commercial and investment banking and advisory services for the Partnership from time to time for which they receive and have received customary fees and expenses. In particular, affiliates of certain of the Initial Purchasers are lenders under the Partnership’s revolving credit facility and therefore may receive their pro rata share of any proceeds from the sale of the Notes that are used to repay borrowings under the Partnership’s revolving credit facility. The Initial Purchasers may, from time to time, engage in transactions with and perform services for the Partnership in the ordinary course of their business, for which they will receive fees and expenses.
In addition, the Issuers and the Guarantors have agreed with the Initial Purchasers not to offer or sell any debt securities for a period of 60 days after the date of the Purchase Agreement without the prior consent of J.P. Morgan Securities LLC.
The summary of the Purchase Agreement set forth in this Item 1.01 does not purport to be complete and is qualified by reference to such agreement, a copy of which is being filed as Exhibit 10.1 hereto and is incorporated herein by reference.