An Archrock Inc. subsidiary is offering $500 million in senior notes due 2032 as part of a push to raise funding for its $983 million acquisition of gas compression services provider Total Operations and Production Services. (Source: Shutterstock)
An Archrock Inc. subsidiary is offering $500 million in senior notes due 2032 as part of a push to raise funding for its $983 million acquisition of gas compression services provider Total Operations and Production Services (TOPS), the company said on Aug. 12.
In July, the company priced an underwritten public offering of common stock in hopes of generating another $223 million in proceeds.
In the debt offering, Archrock said it intends to use any remaining net proceeds for general corporate purposes, which may include the repayment of indebtedness, including a portion of the outstanding borrowings under Archrock’s revolving credit facility.
Fitch Ratings rated the notes offering BBB, which indicates that expectations of a default are low risk.
Fitch said the Archrock deal will acquire a fleet of primarily electric motor-drive compressors that operate on a fixed-fee, contracted basis in the Permian Basin.
Fitch does not expect the transaction to have a material effect on Archrock's average remaining contract life or counterparty credit quality, but it will increase the company's geographic concentration, the ratings service said on Aug. 12.
Leverage will rise as a result of the transaction but should remain well below Fitch's negative leverage sensitivity of 4.5x.
As of June 30, Archrock had $919,000 cash on hand and $435 million of available borrowing capacity on its $750 million asset-backed loan (ABL) facility due May 2028. Fitch does not expect the borrowing base to restrict the company's borrowing capacity at any point during the forecast period.
Archrock's nearest maturity is April 2027.
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