Kodiak Gas Services Announces Pricing of Offering of Common Stock by Selling Stockholder

Rhea-AI Summary

Kodiak Gas Services (NYSE: KGS) announced the pricing of a public offering of 6,086,957 shares of its common stock by an affiliate of EQT Infrastructure III and IV funds at $25.00 per share. The underwriters have a 30-day option to purchase up to 913,043 additional shares. Kodiak will not receive any proceeds from the sale. The offering is expected to close on September 11, 2024. Concurrent with the closing, Kodiak plans to repurchase $25 million of common stock from the selling stockholder at the public offering price. Barclays, Goldman Sachs & Co. , and J.P. Morgan are acting as joint book-running managers for the offering.

Positive

• Potential for increased stock liquidity due to the large offering size
• Company's commitment to repurchase $25 million of stock shows confidence in its value
• Involvement of major financial institutions as book-running managers may indicate market confidence

Negative

• Large offering may lead to temporary stock price pressure
• Existing shareholders may experience dilution
• Company not receiving any proceeds from the stock sale

Insights

Financial Analyst

The pricing of Kodiak Gas Services' secondary offering at $25 per share indicates strong market interest. With 6,086,957 shares being offered, the total raise could reach $152 million, potentially increasing to $175 million if the overallotment option is exercised. This substantial offering by the selling stockholder, EQT Infrastructure, suggests a strategic move to capitalize on Kodiak's current valuation. The concurrent $25 million share repurchase by Kodiak demonstrates confidence in the company's financial position and could be viewed as a positive signal to investors. However, it's important to note that Kodiak won't receive any proceeds from this offering, which limits its direct financial impact on the company's operations or growth initiatives.

Market Research Analyst

This secondary offering could significantly impact Kodiak's stock liquidity and investor base. The introduction of over 6 million shares to the market may lead to short-term price pressure, but it also broadens the company's shareholder base, potentially increasing long-term trading volume and market interest. The $25 per share price point suggests a premium valuation, indicating market confidence in Kodiak's business model and growth prospects in the gas services sector. The involvement of major underwriters like Barclays, Goldman Sachs and J.P. Morgan adds credibility to the offering. Investors should monitor post-offering trading patterns and any shifts in institutional ownership, as these could influence future stock performance and volatility.

Legal Expert

The use of an automatic shelf registration statement on Form S-3 for this offering indicates Kodiak's status as a well-known seasoned issuer (WKSI), which streamlines the offering process. The company's compliance with SEC regulations, including the provision of a prospectus supplement and base prospectus, demonstrates transparency and adherence to legal requirements. The explicit statement regarding the unlawfulness of sales in certain jurisdictions without proper registration highlights the company's commitment to regulatory compliance. Investors should note that while this offering doesn't directly benefit Kodiak's balance sheet, it does alter the ownership structure, potentially impacting corporate governance dynamics. The concurrent share repurchase also raises interesting legal considerations regarding insider transactions and the use of company funds.

THE WOODLANDS, Texas--(BUSINESS WIRE)-- Kodiak Gas Services, Inc. (NYSE: KGS) (“Kodiak” or the “Company”) today announced the pricing of an underwritten public offering (the “Offering”) of 6,086,957 shares of its common stock by an affiliate of the funds known as EQT Infrastructure III and EQT Infrastructure IV (the “selling stockholder”) at a price to the public of $25.00 per share. The selling stockholder granted the underwriters a 30-day option to purchase up to an additional 913,043 shares of the Company’s common stock. Kodiak will not sell any shares of its common stock in the Offering and will not receive any proceeds from the sale of the shares of its common stock being offered by the selling stockholder. The Offering is expected to close on September 11, 2024, subject to customary closing conditions.

Concurrent with the closing of the Offering, the Company intends to purchase from the selling stockholder in a private transaction $25 million of common stock at a price per share equal to the public offering price (the “Share Repurchase”). The Offering is not conditioned upon the closing of the Share Repurchase, but the Share Repurchase is conditioned upon the closing of the Offering.

Barclays, Goldman Sachs & Co. LLC and J.P. Morgan are acting as joint book-running managers for the Offering. The Offering is being made only by means of a prospectus supplement and the accompanying base prospectus, which was filed as part of an automatic shelf registration statement on Form S-3 (File No. 333-280737), which was filed with the Securities and Exchange Commission (the “SEC”) and became effective on July 10, 2024. Before you invest, you should read the prospectus in that registration statement and other documents the Company has filed with the SEC for more complete information about the Company and the Offering. Copies of the preliminary prospectus supplement and accompanying base prospectus relating to the Offering, as well as copies of the final prospectus supplement once available, may be obtained for free on the SEC’s website at www.sec.gov or by contacting: Barclays Capital Inc., c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717, by phone at 1-888-603-5847 or by email at barclaysprospectus@broadridge.com; Goldman Sachs & Co. LLC, Prospectus Department, 200 West Street, New York, NY 10282, telephone: 1-866-471-2526, facsimile: 212-902-9316 or by emailing Prospectus-ny@ny.email.gs.com; and J.P. Morgan Securities LLC, c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717, by email at prospectus-eq_fi@jpmchase.com and postsalemanualrequests@broadridge.com.

There shall not be any sale of these securities in any state or jurisdiction in which an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

About Kodiak

Kodiak is the largest contract compression services provider in the United States, serving as a critical link in the infrastructure enabling the safe and reliable production and transportation of natural gas and oil. Headquartered in The Woodlands, Texas, Kodiak provides contract compression and related services to oil and gas producers and midstream customers in high-volume gas gathering systems, processing facilities, multi-well gas lift applications and natural gas transmission systems.

Forward-Looking Statements

This press release includes “forward-looking statements” for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are statements other than statements of historical fact. Forward-looking statements can be identified by words such as: “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will” and similar references to future periods. They include statements regarding the Offering, including the expected closing thereof. Although Kodiak believes the expectations and forecasts reflected in the forward-looking statements are reasonable, Kodiak can give no assurance they will prove to have been correct. They can be affected by inaccurate or changed assumptions or by known or unknown risks and uncertainties. Important risks, assumptions and other important factors that could cause future results to differ materially from those expressed in the forward-looking statements are described under “Risk Factors” in Item 1A of Kodiak’s annual report on Form 10-K for the year ended December 31, 2023 and any updates to those factors set forth in Kodiak’s subsequent quarterly reports on Form 10-Q or current reports on Form 8-K. Kodiak undertakes no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240909103413/en/

Investor Contact:

Graham Sones, VP – Investor Relations

ir@kodiakgas.com

(936) 755-3529

Source: Kodiak Gas Services, Inc.

FAQ

How many shares of KGS stock are being offered in the public offering?

The public offering includes 6,086,957 shares of Kodiak Gas Services (KGS) common stock, with an option for underwriters to purchase up to an additional 913,043 shares.

What is the price per share for the KGS stock offering?

The price per share for the Kodiak Gas Services (KGS) stock offering is set at $25.00.

When is the expected closing date for the KGS stock offering?

The Kodiak Gas Services (KGS) stock offering is expected to close on September 11, 2024, subject to customary closing conditions.

Is Kodiak Gas Services (KGS) selling any shares in this offering?

No, Kodiak Gas Services (KGS) is not selling any shares in this offering and will not receive any proceeds from the sale of shares by the selling stockholder.

What is the planned share repurchase by Kodiak Gas Services (KGS) in relation to this offering?

Concurrent with the offering closing, Kodiak Gas Services (KGS) plans to repurchase $25 million of common stock from the selling stockholder at the public offering price.