Exterran begins roadshow Tuesday for $400 million seven-year notes

By Paul Deckelman

New York, July 13 – Subsidiaries of Exterran Holdings Inc. will begin a roadshow on Tuesday for a planned $400 million issue of seven-year senior unsecured notes, high-yield syndicate sources said Monday.

That roadshow will open in New York, where a group luncheon is to be held. On Wednesday, the roadshow will move to Boston, and then to the U.S. west coast on Thursday and Friday, with pricing expected thereafter.

The Rule 144A/Regulation S offering, which is being sold with registration rights, will be brought to market via joint bookrunning managers Goldman Sachs & Co., Wells Fargo Securities LLC, Credit Agricole Securities (USA) Inc., Bank of America Merrill Lynch, Citigroup Global Markets Inc., RBC Capital Markets Corp. and UniCredit Bank AG.

ScotiaCapital (USA) Inc. and SMBC Nikko Securities America Inc. will act as senior co-managers on the issue.

HSBC Securities (USA) Inc., Santander Investment Securities Inc. and BB&T Capital Markets will be co-managers on the deal.

The notes will come with three years of call protection.

The notes are being issued in connection with the coming spin-off by Exterran – a Houston-based global provider of natural gas compression services, operations, maintenance, service and equipment for oil and gas producers, processors and transporters – of its international services and global fabrication businesses, which will be formed into a stand-alone, publicly traded company called Exterran Corp. Divestment of the global operations will leave Exterran Holdings as pure-play U.S. compression services business.

The notes are to be issued by Exterran Energy Solutions, LP, currently a wholly owned subsidiary of Exterran Holdings, and EES Finance Corp., a wholly owned subsidiary of Exterran Energy Solutions. After completion of the separation, the issuing entities will become subsidiaries of the new Exterran Corp.

The net proceeds from the note offering, along with borrowings under Exterran Energy Solutions’ new agreement, will be used repay current parent Exterran Holdings’ existing debt.

The consummation of the notes offering will not be conditioned on Exterran Holdings’ completion of the separation; however, the issuers will be required to redeem the notes if the separation does not occur within three months of the consummation of the notes offering.

Under the plan outlined by company executives when the separation of the two companies was announced on Nov. 17, 2014, Exterran Holdings will have no debt at parent level at closing, its debts having been paid with the proceeds of the new notes and bank borrowings of the future stand-alone company and its subsidiaries.

As of the end of the first quarter on March 31, Exterran Holdings had $2.05 billion of consolidated long-term debt on its balance sheet: $805 million at the parent company, which is to be repaid with the new note issue and borrowings, and some $1.25 billion at the company’s affiliated Exterran Partners, LP master limited partnership (Exterran Holdings owns an equity interest in Exterran Partners, including all of the general partner interest). The partnership’s senior notes and credit facilities will remain outstanding at the separation transaction’s close, which is slated for the second half of this year.

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