HOUSTON--(BUSINESS WIRE)--Exterran Holdings, Inc. (NYSE:EXH) announced today that its board of directors has set the record date and distribution date for the spin-off of its international services and global fabrication businesses into a stand-alone, publicly traded company named Exterran Corporation. Exterran Corporation has applied to list its common stock on the New York Stock Exchange under the symbol “EXTN.”
Upon the completion of the spin-off, Exterran Holdings, which will continue to own and operate its contract operations and aftermarket services businesses in the United States, will be renamed Archrock, Inc. and will trade on the New York Stock exchange under the symbol “AROC.” Exterran Partners, L.P., a publicly traded master limited partnership controlled and partially owned by Exterran Holdings, will be renamed Archrock Partners, L.P. and will trade on the Nasdaq Global Select Market under the symbol “APLP.”
The two companies will be separated through the distribution of EXTN common stock to holders of Exterran Holdings common stock on a pro rata basis. Exterran Holdings shareholders will receive one share of EXTN common stock for every two shares of EXH common stock held at the close of business on the record date of July 22, 2015. Subject to the satisfaction of the conditions to closing, the distribution is expected to occur after the close of trading on July 31, 2015.
Following the distribution of EXTN common stock, Exterran Corporation and Archrock will be independent publicly traded companies, and Archrock will retain no equity interest in Exterran Corporation.
No action is required by Exterran Holdings shareholders in order to receive shares of EXTN common stock in the distribution. Exterran Holdings shareholders entitled to receive shares of EXTN common stock in the distribution will receive a book-entry account statement reflecting their ownership of EXTN common stock, or their brokerage account will be credited for the shares.
Trading of Exterran Holdings and Exterran Corporation Shares Prior to the Distribution Date
In connection with the distribution, beginning on or shortly before the record date and continuing up to and including the distribution date, Exterran Holdings expects that there will be three trading markets:
- In the “regular way” market, shares of Exterran Holdings common stock will trade under the symbol “EXH” with an entitlement to receive the EXTN common shares to be distributed on the distribution date. Holders who sell Exterran Holdings common stock in the regular way market before the distribution date will also sell their right to receive EXTN common shares.
- In the “ex-distribution” market, shares of Exterran Holdings common stock will trade under the symbol “EXH WI” without the right to the EXTN common shares to be distributed on the distribution date. Holders who sell Exterran Holdings common stock in the ex-distribution market on or before the distribution date will retain their right to receive EXTN common shares in the distribution.
- In the “when-issued” market, the right to receive EXTN common shares on the distribution date will trade under the symbol “EXTN WI.” Holders who sell the right to EXTN common shares in the when-issued market on or before the distribution date will retain their shares of Exterran Holdings common stock.
Prior to the distribution, Exterran Holdings will mail an information statement to all shareholders entitled to receive the distribution of EXTN common stock. The information statement will describe Exterran Corporation, including the risks of owning EXTN common stock and other details regarding the distribution. Investors are encouraged to consult with their financial and tax advisors regarding the specific implications of buying or selling shares of Exterran Holdings common stock on or before the distribution date.
Information about the Spin-Off, Exterran Corporation and Archrock after the Spin-Off
The completion of the spin-off is subject to the satisfaction or waiver of certain customary conditions, including the effectiveness of the Registration Statement on Form 10 relating to the EXTN common stock, the EXTN common stock being authorized for listing on the NYSE, the issuance of new senior notes due 2022 that will be the obligations of two subsidiaries of Exterran Corporation and other conditions described in the information statement that will be filed as an exhibit to the Form 10.
Exterran Corporation’s capital structure is expected to include (1) a new $750 million revolving credit facility that has been executed and will become available upon the completion of the distribution and the satisfaction of certain other conditions and (2) subject to market conditions, new senior notes due 2022. Exterran Corporation initially intends not to pay a cash dividend on its common stock but its board of directors will continue to evaluate the appropriateness of paying cash dividends in the future.
Upon completion of the spin-off, Andrew J. Way will become President and Chief Executive Officer and Jon C. Biro will become Senior Vice President and Chief Financial Officer of Exterran Corporation. The Board of Directors of Exterran Corporation is expected to consist of Andrew C. Way and current Exterran Holdings directors William M. Goodyear, John P. Ryan, Christopher T. Seaver, Mark R. Sotir, Richard R. Stewart and Ieda Gomes Yell, all of whom will resign from the Exterran Holdings board of directors upon completion of the spin-off.
Upon completion of the spin-off, Exterran Holdings will be renamed Archrock. Borrowings under Exterran Holdings’ existing credit facility and Exterran Holdings’ 7.25% senior notes due 2018 will be retired using the net proceeds of Exterran Corporation’s indebtedness that will be transferred to Archrock, and Archrock’s new capital structure will include a new $300 million revolving credit facility that has been executed and will become available upon the completion of the distribution. Archrock intends to pay quarterly cash dividends on its common stock, with its initial cash dividend expected to be announced before completion of the spin-off. The declaration of future cash dividends and, if declared, the amount of any such dividends, will be subject to its financial condition, earnings, capital requirements, financial covenants, applicable law and other factors its board of directors deems relevant.
D. Bradley Childers will remain the President and Chief Executive Officer and David S. Miller, currently the Senior Vice President and Chief Financial Officer of Exterran Partners, will also become Senior Vice President and Chief Financial Officer of Archrock. The Board of Directors of Archrock is expected to consist of current Exterran Holdings directors Anne-Marie Ainsworth, D. Bradley Childers, Gordon T. Hall, Frances Powell Hawes, J.W.G. “Will” Honeybourne, James H. Lytal and Mark A. McCollum.
In connection with the spin-off, Archrock will agree to make support payments to Exterran Corporation in the event that PDVSA Gas, S.A. defaults on its obligation to make installment payments to Exterran Corporation in connection with PDVSA’s 2012 purchase of Exterran Holdings’ previously nationalized Venezuela assets, if Exterran Corporation’s total leverage ratio exceeds a specified threshold. Archrock’s contingent support payments will not exceed $100 million and will be reduced by, among other things, the amount of payments Exterran Corporation actually receives from PDVSA after the spin-off, as well as by the amount of any dividends or share repurchases by Exterran Corporation and capital expenditures by Exterran Corporation in excess of a specified threshold.
Goldman, Sachs & Co. is acting as financial advisor and Latham & Watkins LLP is acting as legal advisor to Exterran Holdings in connection with the spin-off.
About Exterran Holdings
Exterran Holdings, Inc. is a global market leader in full-service natural gas compression and a premier provider of operations, maintenance, service and equipment for oil and gas production, processing and transportation applications. Exterran Holdings serves customers across the energy spectrum – from producers to transporters to processors to storage owners. Headquartered in Houston, Texas, Exterran has approximately 10,000 employees and operates in approximately 30 countries. Exterran Holdings owns an equity interest, including all of the general partner interest, in Exterran Partners, L.P. (NASDAQ: EXLP), a master limited partnership, the leading provider of natural gas contract compression services to customers throughout the United States. For more information, visit www.exterran.com.
Upon completion of the spin-off, Exterran Holdings will be renamed Archrock, Inc. Archrock will be the leading provider of natural gas contract compression services to customers throughout the United States. In addition, Archrock will be a leading supplier of aftermarket services to customers that own compression equipment in the United States. Archrock will be headquartered in Houston, Texas, operating in the major oil and gas producing regions in the United States, with approximately 2,500 employees. Archrock will continue to own an equity interest, including all of the general partner interest, in Archrock Partners, L.P. (which Exterran Partners will be renamed upon completion of the spin-off).
About Exterran Corporation
Exterran Corporation will be a market leader in compression, production and processing products and services, serving customers throughout the world engaged in all aspects of the oil and natural gas industry. Its global product lines will include natural gas compression, process & treating and production equipment and water treatment solutions. Outside the United States, Exterran Corporation will be a leading provider of full-service natural gas contract compression and a supplier of new, used, OEM and aftermarket parts and services. Exterran Corporation will be headquartered in Houston, Texas, and will operate in approximately 30 countries with approximately 7,000 employees.
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, many of which are outside Exterran Holdings’ control, which could cause actual results to differ materially from such statements. Forward-looking information includes, but is not limited to: Exterran Holdings’ plan to separate and spin-off its international services and global fabrication businesses into a stand-alone, publicly traded company named Exterran Corporation, the timing of the distribution of Exterran Corporation common stock, the possibility that the proposed spin-off will be consummated, statements regarding the trading of Exterran Holdings and Exterran Corporation prior to the distribution date, the expected benefits from the proposed spin-off, statements regarding the expected President and CEO, CFO and the members of the Board of Directors of each of Exterran Corporation and Archrock, Inc. (which Exterran Holdings will be renamed after the spin-off), statements regarding the expected capital structure of each of Exterran Corporation and Archrock, statements regarding Exterran Corporation’s use of proceeds from its expected indebtedness, and statements regarding Archrock’s contingent payment obligation relating to amounts owed by PDVSA to Exterran Corporation; Exterran Holdings’ financial and operational strategies and ability to successfully effect those strategies; Exterran Holdings’ financial and operational outlook and ability to fulfill that outlook, Exterran Holdings’ expectations regarding future economic and market conditions, and demand for Exterran Holdings’ products and services and growth opportunities for those products and services.
While Exterran Holdings believes that the assumptions concerning future events are reasonable, it cautions 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, national and international economic conditions and the impact they may have on Exterran Holdings and its customers; changes in tax laws that impact master limited partnerships; conditions in the oil and gas industry, including a sustained decrease in the level of supply or demand for oil or natural gas or a sustained decrease in the price of oil or natural gas; delays, costs and difficulties that could impact the completion and expected results of the proposed separation transaction; Exterran Holdings’ ability to timely and cost-effectively execute larger projects; changes in political or economic conditions in key operating markets, including international markets; any non-performance by third parties of their contractual obligations; changes in safety, health, environmental and other regulations; and the performance of Exterran Partners.
These forward-looking statements are also affected by the risk factors, forward-looking statements and challenges and uncertainties described in Exterran Holdings’ Annual Report on Form 10-K for the year ended December 31, 2014, Exterran Corporation’s Registration Statement on Form 10 and Exterran Holdings’ filings with the Securities and Exchange Commission, which are available at www.exterran.com. Except as required by law, Exterran Holdings and Exterran Corporation 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.
This press release shall not constitute an offer to sell or a solicitation of an offer to buy the senior notes due 2022 or any other securities.