Archrock Announces Early Results and Initial Settlement Date for Tender Offer for its 6.875% Senior Notes due 2027

Rhea-AI Summary

Archrock (NYSE: AROC) announced the early results and initial settlement date for its tender offer to purchase up to $200 million of its 6.875% Senior Unsecured Notes due 2027. As of the Early Tender Deadline on August 23, 2024, approximately $312.3 million in aggregate principal amount of Notes were tendered, exceeding the $200 million Tender Cap. Due to oversubscription, Archrock will accept tendered Notes on a prorated basis using a factor of about 64%. The Initial Settlement Date is set for August 26, 2024. Holders tendering after the Early Tender Deadline will not have their Notes accepted for payment. The offer will expire on September 10, 2024, unless extended or terminated earlier.

Positive

• Strong investor interest with $312.3 million in Notes tendered, exceeding the $200 million Tender Cap
• Potential reduction of outstanding debt by $200 million
• Proactive management of debt structure

Negative

• Oversubscription may lead to disappointment for some noteholders unable to tender their full amount
• Partial debt repurchase still leaves $300 million of the 6.875% Notes outstanding

Insights

Financial Analyst

Archrock's tender offer for its 6.875% Senior Notes due 2027 has been oversubscribed, indicating strong investor interest in cashing out. The company aimed to repurchase up to $200 million of the $500 million outstanding, but received tenders for $312.3 million. This oversubscription will result in a pro-ration factor of 64%, meaning investors will only be able to sell back about two-thirds of the bonds they tendered.

From a financial perspective, this move allows Archrock to reduce its debt burden and potentially lower interest expenses. However, the high participation rate suggests investors may perceive better opportunities elsewhere or have concerns about the company's long-term prospects. The tender offer's success could improve Archrock's balance sheet, but it's important to monitor how they plan to use any freed-up capital.

Market Research Analyst

The oversubscription of Archrock's tender offer reveals interesting market dynamics. Investors' eagerness to sell back these high-yield (6.875%) bonds suggests they might be anticipating lower interest rates in the future or seeking to reallocate their investments. This could be driven by broader economic factors or sector-specific concerns in the oil and gas industry, where Archrock operates.

The pro-ration process might lead to some investor dissatisfaction, as many bondholders won't be able to sell as much as they intended. This could potentially impact Archrock's reputation in the debt markets. However, the successful tender also demonstrates the company's ability to manage its debt proactively, which could be viewed positively by equity investors and credit rating agencies.

HOUSTON, Aug. 26, 2024 (GLOBE NEWSWIRE) -- Archrock, Inc. (NYSE: AROC) (“Archrock”) today announced that it had received tenders for an aggregate principal amount of approximately $312.3 million of its outstanding 6.875% Senior Unsecured Notes due 2027 (the “Notes”) in its previously announced cash tender offer (the “offer”) to purchase up to $200 million aggregate principal amount (the “Tender Cap”) of the $500 million aggregate principal amount outstanding of the Notes, as of 5:00 p.m., New York City time, on August 23, 2024 (the “Early Tender Deadline”), as well as the initial settlement date for the offer on August 26, 2024 (the “Initial Settlement Date”).

The offer is being made pursuant to the terms and conditions contained in the Offer to Purchase dated August 12, 2024, copies of which may be obtained from D.F. King & Co., Inc., the tender agent and information agent for the offer, by calling (888) 628-9011 (toll free) or, for banks and brokers, (212) 269-5550 or by email at archrock@dfking.com.

The offer will expire at 5:00 p.m., New York City Time, on September 10, 2024, unless extended or earlier terminated (such time and date as the same may be extended, the “Expiration Time”). The withdrawal deadline for validly tendered Notes was 5:00 p.m., New York City time, on August 23, 2024.

Because the purchase of all validly tendered Notes would cause us to purchase a principal amount greater than the $200 million Tender Cap, the offer is oversubscribed and Archrock, if it accepts Notes in the offer, will accept for purchase tendered Notes on a prorated basis as described in the offer documents using a pro ration factor of approximately 64%. Payment for any Notes so accepted will be made promptly on the Initial Settlement Date, subject to the satisfaction or waiver of the conditions to the offer. Because the offer is oversubscribed as of the Early Tender Deadline, holders of Notes who validly tender Notes after the Early Tender Deadline will not have any of their Notes accepted for payment.

Archrock has retained Wells Fargo Securities, LLC to serve as the Dealer Manager for the offer. Questions regarding the terms of the tender offer may be directed to Wells Fargo Securities, LLC, at (704) 410-4820 (collect) or (866) 309-6316 (U.S. toll-free).

About Archrock

Archrock is an energy infrastructure company with a primary focus on midstream natural gas compression and a commitment to helping its customers produce, compress and transport natural gas in a safe and environmentally responsible way. Headquartered in Houston, Texas, Archrock is a premier provider of natural gas compression services to customers in the energy industry throughout the U.S. and a leading supplier of aftermarket services to customers that own compression equipment. For more information on how Archrock embodies its purpose, WE POWER A CLEANER AMERICA, please visit www.archrock.com.

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 the intended use of net proceeds from the proposed 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, 2023, as amended by Amendment No. 1 on Form 10-K/A, Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, 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:

Archrock, Inc.

INVESTORS Megan Repine VP of Investor Relations 281-836-8360 investor.relations@archrock.com

MEDIA Andrew Siegel / Jed Repko Joele Frank 212-355-4449

FAQ

What is the Tender Cap for Archrock's (AROC) 6.875% Senior Notes due 2027 tender offer?

The Tender Cap for Archrock's (AROC) tender offer for its 6.875% Senior Notes due 2027 is $200 million aggregate principal amount.

When is the expiration date for Archrock's (AROC) tender offer?

The tender offer for Archrock's (AROC) 6.875% Senior Notes due 2027 is set to expire at 5:00 p.m., New York City Time, on September 10, 2024, unless extended or earlier terminated.

What is the pro ration factor for Archrock's (AROC) oversubscribed tender offer?

Due to oversubscription, Archrock (AROC) will accept tendered Notes on a prorated basis using a pro ration factor of approximately 64%.

What was the total amount of Notes tendered in Archrock's (AROC) offer by the Early Tender Deadline?

By the Early Tender Deadline of August 23, 2024, Archrock (AROC) received tenders for an aggregate principal amount of approximately $312.3 million of its 6.875% Senior Notes due 2027.