8-K
Archrock, Inc. (AROC)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported):December 17, 2020
Commission File Number 001-33666
ARCHROCK, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 74-3204509 |
|---|---|
| (State or other jurisdiction of <br><br>incorporation) | (I.R.S. Employer Identification No.) |
9807 Katy Freeway, Suite 100, Houston,TX 77024
Houston,Texas
(Address of principal executive offices, zip code)
(281) 836-8000
Registrant’s telephone number, including area code
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written<br>communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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| ¨ | Soliciting material pursuant to Rule 14a-12 under the<br>Exchange Act (17 CFR 240.14a-12) |
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| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b)<br>under the Exchange Act (17 CFR 240.14d-2(b)) |
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| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c)<br>under the Exchange Act (17 CFR 240.13e-4(c)) |
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Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of exchange on which registered |
|---|---|---|
| Common<br> stock, par value $0.01 per share | AROC | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
| Item 1.01 | Entry into a Material Definitive Agreement |
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Indenture
On December 17, 2020, our wholly owned subsidiaries, Archrock Partners, L.P. (the “Partnership”) and Archrock Partners Finance Corp. (“Finance Corp.” and, together with the Partnership, the “Issuers”), completed a private offering (the “Notes Offering”) of $300,000,000 aggregate principal amount of 6.250% senior notes due 2028 (the “New Notes”), along with the related guarantees of the New Notes (the “Guarantees”).
The New Notes and Guarantees were issued pursuant to an indenture (the “Indenture”), dated December 20, 2019, among the Issuers, Archrock, Inc. (the “Company”), certain subsidiaries (other than the Issuers) of the Company party thereto (collectively with the Company, the “Guarantors”) and Wells Fargo Bank, National Association, as trustee (the “Trustee”), pursuant to which the Issuers issued $500,000,000 aggregate principal of 6.250% Senior Notes due 2028 in December 2019 (the “Initial Notes” and, together with the New Notes, the “Notes”). The New Notes constitute “Additional Notes” (as such term is defined in the Indenture) and were issued pursuant to and in compliance with the Indenture. The New Notes will have identical terms as the Initial Notes, other than the issue date, and the New Notes and the Initial Notes will be treated as a single class of securities under the Indenture.
The Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by the Guarantors. The Notes and the Guarantees rank equally in right of payment with all of the Issuers’ and the Guarantors’ existing and future senior indebtedness.
Interest on the New Notes is payable semi-annually in arrears on April 1 and October 1 of each year, beginning April 1, 2021, at a rate of 6.250% per year. The Notes mature on April 1, 2028.
At any time prior to April 1, 2023, the Issuers may redeem all or part of the Notes, at a redemption price equal to 100% of the principal amount of the Notes plus a “make-whole” premium plus accrued and unpaid interest, if any, to, but not including, the redemption date. At any time prior to April 1, 2023, the Issuers may also redeem up to 35% of the aggregate principal amount of the Notes with an amount of cash not greater than the net cash proceeds from one or more equity offerings, at a redemption price of 106.250% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to, but not including, the redemption date, as long as at least 65% of the aggregate principal amount of the Notes originally issued on the issue date (excluding notes held by the Company and its subsidiaries) remains outstanding after each such redemption and the redemption occurs within 180 days after the date of the closing of such equity offering.
On or after April 1, 2023, the Issuers may redeem all or part of the Notes at the redemption prices set forth below, plus accrued and unpaid interest, if any, to, but not including, the redemption date, beginning on April 1 of the years indicated below:
| Year | Percentage | ||
|---|---|---|---|
| 2023 | 103.125 | % | |
| 2024 | 102.083 | % | |
| 2025 | 101.042 | % | |
| 2026 and thereafter | 100.000 | % |
The Indenture contains covenants that limit the ability of the Company and its restricted subsidiaries, including the Issuers, to (i) make distributions on, purchase or redeem the Company’s common stock or repurchase or redeem subordinated indebtedness; (ii) make investments; (iii) incur, assume or guarantee additional indebtedness or issue preferred stock; (iv) create liens to secure indebtedness; (v) sell or otherwise dispose of assets; (vi) consolidate with or merge with or into, or sell its properties to, another person; (vii) enter into transactions with affiliates; and (viii) create unrestricted subsidiaries. These covenants are subject to important exceptions and qualifications. If the Notes achieve an investment grade rating from each of Moody’s Investors Service, Inc. and S&P Global Ratings and no default under the Indenture exists, many of the foregoing covenants will terminate.
The Indenture also contains customary events of default, including (i) default for 30 days in the payment when due of interest on the Notes; (ii) default in payment when due of principal of or premium, if any, on the Notes; (iii) covenant defaults, (iv) cross-defaults to certain indebtedness and (v) certain events of bankruptcy or insolvency with respect to the Company or any of the Guarantors (including the Issuers). If an event of default arises from certain events of bankruptcy, insolvency or reorganization, with respect to the Issuers, the Company, any restricted subsidiary of the Company that is a significant subsidiary or any group of restricted subsidiaries of the Company that, taken together, would constitute a significant subsidiary of the Company, all outstanding Notes will become due and payable immediately without further action or notice. If an event of default occurs and is continuing, the Trustee or the holders of at least 25% in aggregate principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately.
If the Partnership experiences certain kinds of changes of control, holders of the Notes will be entitled to require the Partnership to repurchase all or any part (equal to $2,000 or an integral multiple of $1,000 in excess of $2,000) of that holder’s Notes pursuant to an offer on the terms set forth in the Indenture. The Company will offer to make a cash payment equal to 101% of the aggregate principal amount of the Notes repurchased plus accrued and unpaid interest on the Notes repurchased to, but not including, the date of purchase, subject to the rights of holders of the Notes on the relevant record date to receive interest due on the relevant interest payment date.
The summary of the Indenture 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 4.1 hereto and is incorporated herein by reference.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
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The information included in Item 1.01 hereof is incorporated herein by reference.
| Item 7.01 | Regulation FD Disclosure. |
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On December 17, 2020, the Company issued a press release announcing the closing of the Notes Offering. A copy of the press release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.
The information included in this Item 7.01 and Exhibit 99.1 attached hereto are being furnished and shall not be deemed “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. The information included in this Item 7.01 and Exhibit 99.1 attached hereto shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended.
| Item 9.01. | Financial Statements and Exhibits. |
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(d) Exhibits*.*
| Exhibit Number | Description |
|---|---|
| 4.1 | Indenture, dated as of December 20, 2019, by and<br> among Archrock Partners, L.P., Archrock Partners Finance Corp., the guarantors party thereto and Wells Fargo Bank, National<br> Association, as trustee, incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K (file<br> no. 001-33666) filed on December 20, 2019. |
| 99.1 | Archrock, Inc. press release dated December 17,<br> 2020. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| ARCHROCK, INC. | ||
|---|---|---|
| By: | /s/ Stephanie C. Hildebrandt | |
| Stephanie C. Hildebrandt | ||
| Senior Vice President, General Counsel and Secretary | ||
| December 17, 2020 |
Exhibit 99.1
ArchrockAnnounces Closing of $300 Million of Senior Notes Offering
HOUSTON, December 17, 2020 – Archrock, Inc. (NYSE: AROC) (“Archrock”) today announced the closing of the previously announced private offering by Archrock Partners, L.P. (“Archrock Partners”), a wholly-owned subsidiary of Archrock, of $300 million aggregate principal amount of 6.250% senior notes due 2028 (the “New Notes”). Archrock Partners Finance Corp., a wholly-owned subsidiary of Archrock Partners (together with Archrock Partners, the “Issuers”), is the co-issuer of the New Notes. The New Notes are being offered as additional notes under an indenture, dated December 20, 2019 (the “Indenture”), pursuant to which the Issuers previously issued $500 million aggregate principal amount of 6.250% senior notes due 2028 (the “Initial Notes”). The New Notes will have identical terms as the Initial Notes, other than the issue date, and the New Notes and the Initial Notes will be treated as a single class of securities under the Indenture. Archrock Partners intends to use the net proceeds of the sale of the New Notes to partially repay outstanding borrowings under its revolving credit facility and for general partnership purposes.
The New Notes have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state securities laws and, unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and the rules promulgated thereunder and applicable state securities laws. The New Notes will be offered only to qualified institutional buyers in reliance on Rule 144A under the Securities Act and non-U.S. persons in transactions outside the United States in reliance on Regulation S under the Securities Act.
This press release does not constitute an offer to sell or the solicitation of an offer to buy the securities described herein, nor shall there be any sale of these securities in any jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
About Archrock
Archrock is an energy infrastructure company with a pure-play focus on midstream natural gas compression. Archrock is the leading provider of natural gas compression services to customers in the oil and natural gas industry throughout the United States and a leading supplier of aftermarket services to customers that own compression equipment in the United States.
About Archrock Partners
Archrock Partners is a leading provider of natural gas compression services to customers in the oil and natural gas industry throughout the United States. Archrock owns all of the limited and general partnership interests in Archrock Partners.
Forward-Looking Statements
All statements in this release (and oral statements made regarding the subjects of this release) other than historical facts are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of uncertainties and factors that could cause actual results to differ materially from such statements, many of which are outside Archrock or Archrock Partners’ control. Forward-looking information includes, but is not limited to: statements regarding Archrock Partners’ intended use of net proceeds from the offering.
While Archrock and Archrock Partners believe that the assumptions concerning future events are reasonable, they caution that there are inherent difficulties in predicting certain important factors that could impact the future performance or results of its business. Among the factors that could cause results to differ materially from those indicated by such forward-looking statements are: local, regional and national economic conditions and the impact they may have on Archrock Partners’ and its customers; conditions in the oil and gas industry, including the level of production of, demand for or price of oil or natural gas; changes in safety, health, environmental and other regulations; the financial condition of Archrock Partners’ customers; the failure of any customer to perform its contractual obligations; and the performance of Archrock.
These forward-looking statements are also affected by the risk factors, forward-looking statements and challenges and uncertainties described in Archrock’s Annual Report on Form 10-K for the year ended December 31, 2019, and those reports set forth from time to time in Archrock’s filings with the Securities and Exchange Commission, which are available at www.archrock.com. Except as required by law, Archrock and Archrock Partners expressly disclaim any intention or obligation to revise or update any forward-looking statements whether as a result of new information, future events or otherwise.
SOURCE: Archrock, Inc.
For information, contact:
Megan Repine
Vice President, Investor Relations
(281) 836-8360
investor.relations@archrock.com