Seeking Alpha • Sep 11

Exterran 8.125% 2025: Likely To Be Called Above Par Soon

Summary Enerflex issued circular to it shareholders, achieving another big milestone to close the Exterran acquisition. Enerflex will need to issue a Change of Control offer for the Exterran 8.125% 2025 notes. Enerflex has committed financing in place to refinance Exterran's debt. The bond is expected to be taken out before the end of the year at $101-102. CUSIP: 30227KAE91. Situation Overview Enerflex (EFX:CA) announced its acquisition of Exterran (EXTN) back in January in an all-stock transaction. Enerflex and Exterran have obtained all major regulatory approvals and shareholder votes (for both Enerflex and Exterran) are scheduled for October 11, 2022. There is committed debt financing in place to refinance the entire capitals structure of the combined entity - a new $700 million RCF and a $925 million bridge loan, which will be used to refinancing the Exterran debt according to the circular filed on SEDAR. The fact that circular/proxy statement and F-4 are filed indicates that the management team believes that achieving the required shareholder vote on both sides, which is the remaining key condition to the acquisition. In addition, Chai trust which owns 24.5% of Exterran stock, and all the directors and executive officers that collectively hold ~4% of the stock entered into voting agreements in favour of the merger. The only wildcard is whether the Enerflex shareholder will approve the deal (via agreeing to issue new shares to Exterran shareholders). From existing Enerflex's shareholder perspective, I believe the transaction rationale seems logical (scale, cost synergy, more recurring gross margin) and the deal metrics are accretive in terms of cash flow per share. I also didn't find the top shareholders publicly oppose this transaction. 2021 Proxy 2022 Proxy Exterran 8.125% 2025 This transaction should trigger the Change of Control clause: Indenture This means post transaction the Enerflex is required to issue a $101 change of control offer to the bondholders, who may or may not sell into the offer. The bond is also callable at ~$102 today. Enerflex could first try the change of control offer to see how many bondholders take the $101 price, and then call the rest at $102. Alternatively, Enerflex could run a separate tender offer at a price between $101-102, while asking for consent to waive the change of control offer requirement. If I'm advising Enerflex, I'd tell them to just call all the bonds at $102 to have a clean process and build some credit with the credit community as Enerflex may need to come back to the market to refinance the bridge loan in the future. Indenture

Anuncio • Jan 26

Enerflex Ltd. (TSX:EFX) entered into a definitive agreement to acquire Exterran Corporation (NYSE:EXTN) from Chai Trust Co LLC, EGI-Fund B L.L.C., EGI-Fund C, L.L.C, EGI-Fund (05-07) Investors, L.L.C., EGI-Fund (08-10) Investors, L.L.C, EGI-Fund (11-13) Investors, L.L.C and others for approximately $210 million.

Enerflex Ltd. (TSX:EFX) entered into a definitive agreement to acquire Exterran Corporation (NYSE:EXTN) from Chai Trust Co LLC, EGI-Fund B L.L.C., EGI-Fund C, L.L.C, EGI-Fund (05-07) Investors, L.L.C., EGI-Fund (08-10) Investors, L.L.C, EGI-Fund (11-13) Investors, L.L.C and others for approximately $210 million on January 24, 2022. Pursuant to the terms of agreement, each share of Exterran and each security will be exchanged for 1.021 Enerflex common shares in an all-stock transaction. The transaction value for Exterran is approximately $735 million, which represents an 18% premium to Exterran’s enterprise value as of January 21, 2022. The transaction value paid for Exterran implies an EV/2022E Adjusted EBITDA of 3.6x and Price/2022E Cash Flow of 1.9x, including synergies, respectively. Upon closing of the Transaction, Enerflex and Exterran shareholders will respectively own approximately 72.5% and 27.5% of the total Enerflex common shares outstanding. Enerflex will continue to trade on the Toronto Stock Exchange (“TSX”) and intends to apply to either the New York Stock Exchange (the “NYSE”) or the NASDAQ exchange (“NASDAQ”) for the listing of Enerflex common shares to be effective upon transaction close. Upon closing, Exterran Common Stock will be delisted from the New York Stock Exchange. The company will operate as Enerflex Ltd. and will remain headquartered in Calgary, Alberta, Canada. In the event of termination, Enerflex is required to pay Exterran a termination fee of $30 million while Enerflex is required to pay Exterran a termination fee of $20 million. Additionally, Enerflex is required to pay Exterran a termination fee of $20,000,000 if (a) prior to obtaining Enerflex shareholder approval, Enerflex terminates the Merger Agreement to enter into a definitive agreement with a third party to effect a Parent Superior Proposal; or (b) Exterran terminates the Merger Agreement in the event of a Enerflex Change of Recommendation, as set forth in, and subject to the conditions of, the Merger Agreement. Enerflex must also pay Exterran a $20,000,000 termination fee if the Merger Agreement is terminated in certain specified circumstances where a Parent Alternative Proposal to the Merger has been made and not withdrawn at least two (2) business days prior to the Enerflex shareholders’ meeting and, within twelve (12) months following such termination, Enerflex enters into a definitive agreement in respect of an alternative transaction of the type described in the relevant provisions of the Merger Agreement, or such transaction is consummated. Additionally, Exterran is required to pay Enerflex a termination fee of $10,000,000 if (a) prior to obtaining the Exterran shareholder approval, Exterran terminated the Merger Agreement to enter into a definitive agreement with a third party to effect a Company Superior Proposal; or (b) Enerflex terminates the Merger Agreement in the event of a Exterran Change of Recommendation, as set forth in, and subject to the conditions of, the Merger Agreement. Exterran must also pay Enerflex a $10,000,000 termination fee if the Merger Agreement is terminated in certain specified circumstances where a Company Alternative Proposal to the Merger has been made and not withdrawn at least two (2) business days prior to Exterran’s stockholders’ meeting and, within twelve (12) months following such termination, Exterran enters into a definitive agreement in respect of an alternative transaction of the type described in the relevant provisions of the Merger Agreement, or such transaction is consummated On January 24, 2022, concurrently with the execution of the merger agreement, Exterran entered into a voting agreement with the directors and executive officers of Enerflex, pursuant to which such shareholders agreed to vote their Enerflex shares and other securities in favor of the issuance of Enerflex shares pursuant to the merger agreement. Chai Trust Company, LL and the directors and executive officers of Exterran holding shares have also entered into a voting agreement. In conjunction with the Transaction, Enerflex has entered into a binding agreement with the Royal Bank of Canada to provide Enerflex with a fully committed financing consisting of a $600 million 3-year revolving credit facility and a $925 million 5-year bridge loan facility. The bridge loan will provide financing to backstop an anticipated issuance of new debt securities prior to closing of the Transaction. The committed financing is sufficient to fully repay existing Enerflex and Exterran notes and revolving credit facilities and support putting in place a new capital structure, provide for capital expenditures and other ordinary course capital needs, and provide significant liquidity for the pro forma business. One Exterran director will be appointed to Enerflex’s Board of Directors at closing. Marc Rossiter will continue to serve as Enerflex’s President and Chief Executive Officer and a member of the Board of Directors of Enerflex and will oversee all aspects of integration. anjay Bishnoi will continue to serve as Enerflex’s Chief Financial Officer. Enerflex’s Executive Management Team will continue to serve in their current roles. The transaction is subject to adoption of the merger agreement by the Exterran stockholders, the approval of the issuance of Enerflex common shares as the merger consideration by the Enerflex shareholders, expiration or termination of any waiting period applicable under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended as well as the receipt of certain antitrust approvals outside of the United States, Enerflex Common Shares having been conditionally approved for listing on the NYSE or Nasdaq, US Registration Statement shall have become effective, regulatory approval, among others. Merger shall qualify (i) as a “reorganization” within the meaning of Section 368(a) of the Code and (ii) for an exception to the general rule of Section 367(a)(1) of the Code, and (b) this Agreement be, and is hereby adopted as, a “plan of reorganization” for purposes of Sections 354, 361 and 368 of the Code. Board of directors of Enerflex and Exterran unanimously approved the transaction. The transaction is expected to close in the second or third quarter of 2022. The transaction is immediately accretive to shareholders and is expected to approximately double Adjusted EBITDA and be over 50% accretive to cash flow per share and approximately 50% accretive to earnings per share (subject to purchase price allocation to be determined upon closing), for Enerflex shareholders. RBC Dominion Securities Inc. and RBC Capital Markets acted as financial advisors for provided fairness opinion to Enerflex. Brian P. Fenske of Norton Rose Fulbright US LLP, Norton Rose Fulbright Canada LLP, Davies Ward Phillips & Vineberg LLP, and Cravath, Swaine & Moore LLP acted as legal advisors for Enerflex. TD Securities and Scotia Capital acted as strategic advisors to Enerflex. Wells Fargo Securities, LLC acted as financial advisor for provided fairness opinion to Exterran Board. Keith Townsend and Robert J. Leclerc of King & Spalding LLP and McCarthy Tétrault LLP acted as legal advisors for Exterran.

Rendimiento total para el accionista	0.1%
Rendimiento futuro de los dividendos	n/a
Crecimiento de los dividendos	n/a
Próxima fecha de pago de dividendos	n/a
Fecha ex dividendo	n/a
Dividendo por acción	n/a
Ratio de pago	n/a

Segmento	Rentabilidad por dividendo
Empresa (EXTN)	n/a
Suelo de mercado 25% (US)	1.4%
Techo de mercado 25% (US)	4.3%
Media de la industria (Energy Services)	1.7%
Analista de previsiones (EXTN) (hasta 3 años)	n/a

Datos	Última actualización (huso horario UTC)
Análisis de la empresa	2022/10/13 11:23
Precio de las acciones al final del día	2022/10/12 00:00
Beneficios	2022/06/30
Ingresos anuales	2021/12/31

Paquete	Datos	Marco temporal	Ejemplo Fuente EE.UU. ^*
Finanzas de la empresa	10 años	Cuenta de resultados Estado de tesorería Balance	Formulario SEC 10-K Formulario SEC 10-Q
Estimaciones del consenso de analistas	+3 años	Previsiones financieras Objetivos de precios de los analistas	Informes de análisis Blue Matrix
Precios de mercado	30 años	Precios de las acciones Dividendos, escisiones y acciones	Datos de mercado ICE Formulario S-1 de la SEC
Propiedad	10 años	Accionistas principales Información privilegiada	Formulario SEC 4 Formulario SEC 13D
Gestión	10 años	Equipo directivo Consejo de Administración	Formulario SEC 10-K Formulario SEC DEF 14A
Principales avances	10 años	Anuncios de empresas	Formulario SEC 8-K

Analista	Institución
Tim Monachello	ATB Cormark
Kyle May	Capital One Securities, Inc.
James West	Evercore ISI

This company has been acquired

Exterran Dividendos y recompras

Dividendo controles de criterios 0/6

Información clave

Últimas actualizaciones de dividendos y recompras

Recent updates

Exterran 8.125% 2025: Likely To Be Called Above Par Soon

Second quarter 2022 earnings released: US$0.25 loss per share (vs US$1.06 loss in 2Q 2021)

Independent Director exercised options to buy US$79k worth of stock.

First quarter 2022 earnings released: US$0.88 loss per share (vs US$0.88 loss in 1Q 2021)

Price target decreased to US$8.50

Insufficient new directors

Full year 2021 earnings: EPS in line with expectations, revenues disappoint

Price target decreased to US$8.50

Exterran Continues To Focus On Water Business Solutions

Insufficient new directors

Third quarter 2021 earnings released: US$0.47 loss per share (vs US$0.51 loss in 3Q 2020)

Price target decreased to US$9.25

Exterran Corporation Reports Impairment Charges for the Second Quarter Ended June 30, 2021

Second quarter 2021 earnings released: US$1.06 loss per share (vs US$0.53 loss in 2Q 2020)

Exterran Corporation(NYSE:EXTN) dropped from Russell 3000E Value Index

Evaluating Exterran Corporation

President recently bought US$94k worth of stock

Lead Independent Director recently bought US$76k worth of stock

First quarter 2021 earnings released: US$0.88 loss per share (vs US$0.49 loss in 1Q 2020)

We Discuss Why Exterran Corporation's (NYSE:EXTN) CEO Compensation May Be Closely Reviewed

Exterran Corporation, Annual General Meeting, Apr 28, 2021

Price target raised to US$11.50

Full year 2020 earnings released: US$2.63 loss per share (vs US$3.15 loss in FY 2019)

Revenue misses expectations

Is Exterran (NYSE:EXTN) Struggling?

New 90-day high: US$5.09

Exterran Corporation to Report Q4, 2020 Results on Feb 25, 2021

Exterran Corporation (NYSE:EXTN) Insiders Increased Their Holdings

New 90-day high: US$5.02

What Type Of Shareholders Own The Most Number of Exterran Corporation (NYSE:EXTN) Shares?

How Much Is Exterran's (NYSE:EXTN) CEO Getting Paid?

Exterran (NYSE:EXTN) Has No Shortage Of Debt

Third quarter 2020 earnings released: US$0.51 loss per share

Revenue misses expectations

New 90-day low: US$3.90

Exterran Corporation to Report Q3, 2020 Results on Nov 02, 2020

Compass Energy Systems Ltd. entered into an agreement to acquire U.S. Compression Fabrication Business from Exterran Corporation (NYSE:EXTN).

Exterran Corporation to Lay Off Employees from Compression Fabrication Services Business Line

Exterran Corporation to Report Q2, 2020 Results on Aug 10, 2020

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