|
|
Item 1.01.
|
Entry into a Material Definitive Agreement.
|
Elite Acquisition
On August 1, 2019, Archrock, Inc. (“Archrock”)
and Archrock Services, L.P., a wholly-owned subsidiary of Archrock (“Archrock Services”), completed their previously
announced acquisition of substantially all the assets and certain liabilities of Elite Compression Services, LLC (“Elite”),
a portfolio company of JDH Capital Company (together with its affiliates, “JDH”), including approximately 430,000 of
predominately large-horsepower compression assets (the “Elite Acquisition”), for aggregate consideration consisting
of (i) an amount of cash equal to $205 million (the “Cash Consideration”) and (ii) 21,656,683 newly issued shares of
Archrock’s common stock, par value $0.01 per share (the “Archrock Common Stock”), issued to JDH. JDH is a private
investment firm controlled by Jeffery D. Hildebrand, Executive Chairman and Founder of Hilcorp Energy Company (“Hilcorp”),
which is one of Archrock’s customers. Archrock Partners Operating LLC funded the Cash Consideration with borrowings under
its credit facility.
Board Representation Agreement
In connection with the closing of the Elite
Acquisition (the “Closing”), and as previously disclosed in Archrock’s Current Report on Form 8-K filed with
the Securities and Exchange Commission (the “Commission”) on June 24, 2019, Archrock entered into a Board Representation
Agreement (“Board Representation Agreement”) with JDH, pursuant to which JDH has the right to designate one director
to Archrock’s board of directors (the “Board”) for so long as JDH or its successors (together with all affiliates
of such person) continue to hold, on an aggregate basis, at least 7.5% of the then-issued and outstanding shares of Archrock Common
Stock. In connection with the Board’s approval of the Elite Acquisition, the Board unanimously voted to increase the size
of the Board from eight members to nine members and to elect Mr. Hildebrand to fill the vacancy, conditioned and effective upon
the Closing. Effective upon the Closing, Mr. Hildebrand will serve as a member of the Board until the 2020 annual meeting of Archrock’s
stockholders, or until his successor has been duly elected and qualified, or until his earlier death, resignation or removal.
The foregoing description of the Board Representation
Agreement does not purport to be complete and is qualified in its entirety by reference to the complete text of the Board Representation
Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K (this “Current Report”) and
is incorporated by reference herein.
Registration Rights Agreement
Additionally, in connection with the Closing,
and as previously disclosed in Archrock’s Current Report on Form-8-K filed with the Commission on June 24, 2019, Archrock
entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with JDH, pursuant to which, among
other things, JDH has certain rights to require Archrock to file and maintain the effectiveness of a registration statement with
respect to the re-sale of Archrock Common Stock owned by JDH, and under certain circumstances, to require Archrock to initiate
underwritten offerings for such Archrock Common Stock. In addition, JDH has agreed not to sell, transfer or dispose of its Archrock
Common Stock during a holding period that expires six months after the date of the Registration Rights Agreement.
The foregoing description of the Registration
Rights Agreement does not purport to be complete and is qualified in its entirety by reference to the complete text of the Registration
Rights Agreement, a copy of which is filed as Exhibit 10.2 to this Current Report and is incorporated by reference herein.
Harvest Sale
On August 1, 2019, Archrock Services completed
its previously announced disposition of approximately 80,000 active and idle compression horsepower to Harvest Four Corners, LLC,
an affiliate of Hilcorp, for cash consideration equal to $30 million (the “Harvest Sale” and, together with the Elite
Acquisition, the “Transactions”).