Item 1.01. Entry into a Material Definitive Agreement.
On January 29, 2021, TETRA Technologies, Inc. ("TETRA") entered into a Purchase
and Sale Agreement (the "Purchase Agreement") with Spartan Energy Holdco LLC
("Acquirer") a wholly owned subsidiary of Spartan Energy Partners LP
("Spartan"), and, solely for the limited purposes set forth therein, Spartan.
Pursuant to the Purchase Agreement, effective on January 29, 2021, TETRA sold
the following to Acquirer:
(i) 10,952,478 common units ("Common Units") representing limited partner
interests of CSI Compressco LP (the "Partnership"), which represent
approximately 23.1 percent of the outstanding limited partner interests of the
Partnership; and
(ii) all of the outstanding membership interests (the "GP Equity") in CSI
Compressco GP LLC, the general partner of the Partnership (the "General
Partner").
The General Partner holds all of the incentive distribution rights of the
Partnership and a 1.4 percent general partner interest in the Partnership.
Collectively, the sale of the limited partner interests in the Partnership and
the GP Equity pursuant to the Purchase Agreement is referred to herein as the
"GP Sale." As a result of the transactions contemplated by the Purchase
Agreement, Spartan indirectly owns and controls the General Partner and thereby
has the ability to appoint all of the members of the board of directors of the
General Partner.
Transition Services Agreement
In connection with the execution of the Purchase Agreement, on January 29, 2021,
TETRA entered into a Transition Services Agreement (the "Transition Services
Agreement") with the Partnership, pursuant to which TETRA will provide certain
accounting, information technology and back office support services to the
Partnership for a period of up to one year following closing.
Third Amendment to Loan and Security Agreement
In connection with the GP Sale, the Partnership and certain of its wholly-owned
subsidiaries entered into a Third Amendment to Loan and Security Agreement (the
"Amendment") to that certain Loan and Security Agreement, dated as of June 29,
2018, by and among the Partnership, certain of its subsidiaries, Bank of
America, N.A., as administrative agent, issuing bank and swing line lender, and
the lenders party thereto (the "Lenders"), pursuant to which, among other
things, (i) the Lenders consented to the GP Sale and (ii) until the Ratings Hold
Date (as defined in the Amendment), the Partnership is required to maintain an
additional $5.0 million of liquidity and backstop and cash collateralize all
outstanding letters of credit.
The foregoing descriptions of the Transition Services Agreement and the
Amendment do not purport to be complete and are qualified in their entirety by
reference to the Transition Services Agreement and the Amendment, copies of
which are attached as Exhibit 10.1 and 10.2, respectively, to this Current
Report on Form 8-K and are incorporated into this Item 1.01 by reference.
Item 3.01. Notice of Delisting or Failure to Satisfy a Continued Listing Rule or
Standard; Transfer of Listing.
As a result of the Resignations (as defined herein), effective January 29, 2021,
the Partnership will no longer be in compliance with Nasdaq Listing Rule
5605(c)(2)(A), which requires that the Audit Committee of the board of directors
of the General Partner (the "Board") be composed of at least three independent
directors.
Pursuant to Nasdaq Listing Rule 5605(c)(4)(B), the Partnership is entitled to a
cure period of one year, or until January 29, 2022, to regain compliance with
Listing Rule 5605(c)(2)(A). The General Partner expects to be compliant with the
Audit Committee composition requirements of Nasdaq Listing Rule 5605(c)(2)(A) by
or before the end of the cure period. The Board intends to identify candidates
and appoint a new independent director who satisfies the applicable requirements
of the NASDAQ Listing Rules to serve on the Board and the Audit Committee prior
to the expiration of the cure period.
Item 5.01. Changes in Control of Registrant.
The information set forth in Items 1.01 and 5.02 is incorporated herein by
reference.
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Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On January 29, 2021, effective immediately upon consummation of the GP Sale,
(i) each of Brady M. Murphy, Paul D. Coombs, D. Frank Harrison, Elijio V.
Serrano and William D. Sullivan resigned from their respective positions as
members of the Board and (ii) Messrs. Murphy and Serrano resigned from their
positions as President and Chief Financial Officer, respectively, of the General
Partner (collectively, the "Resignations"). None of the Resignations was the
result, in whole or in part, of any disagreement with the General Partner or the
Partnership.
Effective immediately upon the consummation of the GP Sale and the effectiveness
of the Resignations, each of Ted A. Gardner, John E. Jackson, Jonathan W. Byers,
Robert W. Price and Stephen R. Gill became members of the Board (collectively,
the "New Directors"). Directors who are also employees of Spartan, or any of its
respective subsidiaries or affiliates, will not receive additional compensation
for service on the Board. Mr. Gardner and Mr. Gill will receive compensation in
accordance with the Partnership's policies for compensating non-employee
directors. Mr. Gill has been appointed to serve as a member of the Audit
Committee. There are no arrangements, agreements or understandings between the
Partnership and any New Director pursuant to which such New Director was
selected as director. None of Messrs. Gardner, Jackson, Byers, Price and Gill
has any direct or indirect material interest in any transaction required to be
disclosed pursuant to Item 404(a) of Regulation S-K. Mr. James R. Larson, a
current member of the Board and the chairperson of the Audit Committee, will
continue in such roles.
Also on January 29, 2021, effective immediately upon the consummation of the GP
Sale, John E. Jackson was appointed as Chief Executive Officer of the General
Partner, Jonathan W. Byers was appointed as Chief Financial Officer of the
General Partner and Robert W. Price was appointed as Chief Operating Officer of
the General Partner.
John E. Jackson, age 63, has served as the President and Chief Executive Officer
of Spartan Energy Partners LP since 2010. Prior to joining Spartan Energy
Partners LP, Mr. Jackson was the Chairman and CEO of Price Gregory Services, a
leading energy infrastructure services provider specializing in pipeline
construction. Prior to serving in his roles at Price Gregory Services,
Mr. Jackson served as President and Chief Executive Officer of Hanover
Compressor. Prior to that, he held several positions at Duke Energy Field
Services, including Chief Financial Officer, and Union Pacific Resources.
Mr. Jackson serves as on the board of directors of Basic Energy Services, Inc.
(NYSE: BAS) and Main Street Capital Corporation (NYSE: MAIN). Mr. Jackson holds
a B.B.A. in Accounting from Baylor University
Jonathan W. Byers, age 42, has served as Head of Corporate Development and
Secretary of Spartan Energy Partners LP since 2010. Prior to joining Spartan
Energy Partners, Mr. Byers served as Vice President, Corporate Development for
Price Gregory Services. Prior to joining Price Gregory Services, Mr. Byers held
positions at SCF Partners (an energy focused investment firm) and General
Atlantic (a global, growth focused private equity firm). Prior to General
Atlantic, Mr. Byers was employed with Goldman Sachs Group in the Investment
Banking Division. Mr. Byers holds a B.S. in Business Administration from
Georgetown University and an MBA from Harvard Business School.
Robert W. Price, age 53, has served as Chief Operating Officer of Spartan Energy
Partners since 2010. Prior to joining Spartan Energy Partners, Mr. Price held
senior management positions with Exterran Corporation (EXTN), Hanover Compressor
Company and Ariel Compressor Corporation. Mr. Price has spent most of his career
developing and executing gas treating and processing applications in the U.S.
and Latin America. Mr. Price holds a B.S. in Mechanical Engineering from The
University of Notre Dame and an MBA from Carnegie Mellon.
None of the aforementioned officers of the General Partner have employment
contracts with the Partnership. The Partnership does not directly employ the
officers of the General Partner and does not have control over their
compensation. The officers of the General Partner are employed by Spartan and
its affiliates and participate in their employee benefit plans and arrangements.
Following the completion of the transactions contemplated by the Purchase
Agreement, all decisions as to the compensation of the officers of the General
Partner will be determined and approved by Spartan. There is no family
relationship between Messrs. Jackson, Byers and Price, on the one hand, and any
director or executive officer of the General Partner or any person nominated or
chosen to become a director or executive officer of the General Partner.
Additionally, none of Messrs. Jackson, Byers and Price has any direct or
indirect material interest in any transaction required to be disclosed pursuant
to Item 404(a) of Regulation S-K.
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Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal
Year
On January 27, 2021, the General Partner filed a Certificate of Conversion (the
"Certificate of Conversion") with the Secretary of State of the State of
Delaware, which became effective upon filing, pursuant to which the General
Partner converted from a Delaware corporation to a Delaware limited liability
company (the "Conversion"). In connection with the Conversion, an authorized
person filed a Certificate of Formation of the General Partner (the "Certificate
of Formation"), which became effective upon filing, with the Secretary of State
of the State of Delaware and the General Partner adopted that certain Limited
Liability Company Agreement of the General Partner, dated as of January 27, 2021
(the "Limited Liability Company Agreement").
The foregoing descriptions of the Certificate of Conversion, Certificate of
Formation, the Limited Liability Company Agreement do not purport to be complete
and are qualified in their entirety by reference to the complete text of the
Certificate of Conversion, the Certificate of Formation and the Limited
Liability Company Agreement , copies of which are filed as Exhibits 3.1, 3.2 and
3.3, respectively, to this Current Report on Form 8-K and are incorporated by
reference herein.
Item 7.01. Regulation FD Disclosure.
On January 29, 2021, the Partnership issued a press release, a copy of which is
attached hereto as Exhibit 99.1 and incorporated herein by reference,
announcing, among other things, the GP Sale, the appointments of Messrs.
Jackson, Byers and Price as executive officers of the General Partner and the
above-mentioned changes to the Board.
The information in this Item 7.01 of this Current Report on Form 8-K, including
Exhibit 99.1, is being "furnished" and shall not be deemed to be "filed" by the
Company for purposes of Section 18 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or otherwise subject to the liabilities of that
Section, nor shall it be incorporated by reference into any filing under the
Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
Number Description
3.1 Certificate of Conversion of CSI Compressco GP, LLC, effective
January 27, 2021.
3.2 Certificate of Formation of CSI Compressco GP, LLC, effective
January 27, 2021.
3.3 Limited Liability Company Agreement of CSI Compressco GP, LLC,
effective January 27, 2021.
10.1* Transition Services Agreement, dated January 29, 2021, by and
between TETRA Technologies, Inc. and CSI Compressco LP.
10.2 Third Amendment to Loan and Security Agreement, dated January 29,
2021, by and among the Partnership, certain of its subsidiaries, Bank
of America, N.A., as administrative agent, issuing bank and swing line
lender, and the lenders party thereto.
99.1 News Release dated January 29, 2021 issued by CSI Compressco LP.
* Certain schedules have been omitted pursuant to Item 601(a)(5) of Regulation
S-K. The registrant agrees to furnish supplementally a copy of any such
omitted schedule to the Commission upon request.
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