Compressco Partners LP entered into a definitive agreement to purchase all outstanding shares of Compressor Systems Inc. (CSI) from Warren Equipment Co. for $825 million in cash, subject to working capital and other adjustments. The acquisition is expected to increase Compressco’s total horsepower (hp) offering from about 187,000 to more than 1,045,000. It will also give Compressco the ability to use an expanded range of compressor packages—from 20 hp units to 2,370 hp units—for compression services to customers.
Midland, Texas-based CSI fabricates, sells and maintains natural gas compressors and provides compression services covering the entire natural gas production and transportation cycle. CSI owns more than 275 compression units in the 1,000 hp and larger range. For the 12 months ended on March 31, 2014, CSI’s aggregate revenues were $311 million and EBITDA was $82.3 million.
Compressco obtained committed financing for the transaction, which is expected to close in early August. It is expected that financing will also include Compressco’s issuance of about $400 million of public equity and $350 million of publicly rated senior notes, with the balance being drawn from a $400 million revolving credit facility. The indirect 100% owner of Compressco’s general partner, TETRA Technologies Inc., expects to buy common units in the equity offering and make contributions to maintain its 2% general partner in interest in the aggregate amount of up to $40 million.
The combined company will be led by CSI’s current president Tim Knox, with Compressco Partners president Ronald J. Foster in the role of senior vice president and chief marketing officer.
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