HOUSTON, Oct. 22, 2018 (GLOBE NEWSWIRE) -- Hi-Crush Partners LP (NYSE: HCLP), or "Hi-Crush" or the "Partnership", today announced that it has acquired its general partner by acquiring Hi-Crush Proppants LLC for consideration of 11.0 million newly issued common units of the Partnership. Total value of the consideration for the acquisition, comprised entirely of the newly issued units, is $96.25 million based on Friday’s closing price of $8.75 per unit. Through the acquisition, which closed on October 21, 2018, Hi-Crush simplified its corporate structure, eliminating its incentive distribution rights (“IDRs”) and associated reset provisions, and acquiring the non-economic general partner interest in the Partnership. Additionally, effective with the completion of the acquisition, six members of the Board of Directors have resigned, including those seats previously held by Avista Capital Partners and its appointees. The current Board of Directors consists of the three independent directors and Mr. Robert E. Rasmus, Chief Executive Officer of Hi-Crush. Mr. Rasmus was elected Chairman of the Board. The Partnership expects to elect new members to its Board of Directors, including additional independent directors, and to hold meetings for the public election of directors in the future. The terms of the agreement were unanimously approved by the Partnership’s Conflicts Committee, which is comprised solely of independent directors of Hi-Crush’s Board of Directors.
“We are excited to reach an agreement and complete the buyout of our general partner,” said Mr. Rasmus. “This transaction meaningfully simplifies our corporate structure and advances our progress towards conversion from an MLP to a C-Corp sooner than alternate paths, and eliminates the need for any IDR reset. We believe this will result in immediate and long-term benefits for the Partnership as we continue the transformation of our business. These benefits include a lower cost of capital, increased appeal to a wider range of investors, improved corporate governance, enhanced financial flexibility, and ability to respond to the evolving dynamics of our business and industry, generating value for all stakeholders. Our team remains intensely focused on executing on our Mine. Move. Manage. operating strategy, which continues to position Hi-Crush as a strategic leader in the North American frac sand and proppant logistics market.”
“This transaction represents a major milestone as part of a series of strategic steps we’ve taken in recent months to align Hi-Crush’s structure and service offerings for success over the long-term,” said Laura C. Fulton, Chief Financial Officer of Hi-Crush. “These steps include our Senior Notes offering and new asset-backed credit facility completed this summer. The 100% equity financed buyout of our general partner provides us with additional flexibility as we continue to execute on our growth program, and accelerates our pathway to corporate conversion, likely during the first half of 2019. Using equity for the transaction and eliminating cash distributions that would have been associated with the IDR reset path’s requirement of three additional quarters of distributions above $0.7125 per unit allows us to conserve cash and strengthen the balance sheet going forward, in what today is a softer market environment. We look forward to progressing towards a more detailed assessment of a potential conversion transaction, and remain committed to mitigating or eliminating tax implications to unitholders.”
About Hi-Crush
Hi-Crush is a fully integrated, strategic provider of proppant and logistics solutions to the North American petroleum industry. We own and operate multiple frac sand mining facilities and in-basin terminals, and provide mine-to-wellsite logistics services that optimize proppant supply to customers in all major basins. Our PropStream™ service, offering both container- and silo-based wellsite delivery and storage systems, provides the highest level of flexibility, safety and efficiency in managing the full scope and value of the proppant supply chain. Visit HiCrush.com.
