Enerflex Continues Its Advance for for Pending Acquisition of Exterran Corporation

Source: www.gulfoilandgas.com 10/6/2022, Location: North America

Enerflex Ltd., a leading supplier of vertically integrated products and services to the global energy industry, continues to advance towards its pending acquisition of Exterran Corporation by securing its committed financing. The Transaction is on track to close early in the fourth quarter of 2022.

Marc Rossiter, Enerflex's President and Chief Executive Officer commented, "Since announcing the Transaction in early 2022, business conditions have improved and natural gas fundamentals have strengthened, helping to offset today's higher market interest rates. We recorded over Cdn$300 million of Engineered Systems bookings during the third quarter of 2022, which includes approximately Cdn$80 million in carbon capture projects, a major step forward for our Energy Transition business. With this momentum, we have significantly de-risked our 2023 business plans. We are maintaining our target to reduce our bank-adjusted net debt to EBITDA ratio to below 2.5 times within 12 to 18 months of closing, expecting to deleverage much more quickly than we had forecasted when we announced the Transaction earlier this year."

Upon closing, the committed financing for the pro forma business is expected to comprise of:
- A private offering (the "Offering") of U.S.$625 million aggregate principal amount of 9.00% senior secured notes due 2027 (the "Notes"). The estimated net proceeds from the issuance of the Notes will be approximately U.S.$565 million, taking into effect the issuance discount and estimated transaction costs. The Notes will be guaranteed by certain subsidiaries of Enerflex.
- Commitments from a syndicate of financial institutions for a newly drawn U.S.$150 million three-year secured term loan credit facility, bearing an interest rate equal to the Secured Overnight Financing Rate or U.S. base rate plus 3.75% or 2.75% per annum, respectively (the "Term Loan Facility").
- As previously announced, a U.S.$700 million three-year secured revolving credit facility, which the Company expects to be drawn by approximately U.S.$227 million upon closing, bearing an interest rate equal to an applicable margin (ranging from a low of 0.20% per annum to a high of 3.25% per annum based on the Company's net funded debt to EBITDA ratio), plus the applicable reference rate associated with the currency of the borrowings (the "Revolving Credit Facility").
- Enerflex intends to use the net proceeds of the Offering, together with the Term Loan Facility, an initial draw under the Revolving Credit Facility, and cash on hand, to fully repay the existing Enerflex and Exterran notes and revolving credit facilities and put in place a new debt capital structure. The balance of the Revolving Credit Facility will be used for committed capital expenditures and other general corporate purposes and will provide significant liquidity for the pro forma business.

The offering of the Notes is expected to close on October 12, 2022, subject to customary conditions. The closing of the Offering is not conditioned upon the consummation of the Transaction. The Notes will be subject to a special mandatory redemption if (i) the Transaction is not consummated on or prior to November 25, 2022, (ii) the merger agreement for the Transaction is terminated prior to such date, or (iii) Enerflex delivers a notice to the escrow agent and the trustee for the Notes prior to such date advising that it is no longer pursuing the consummation of the Transaction, as further described in the terms of the Notes.

The Notes and guarantees thereof will be offered in a private offering in reliance upon exemptions from, or in transactions not subject to, the registration requirements of the Securities Act of 1933, as amended (the "Securities Act") and the prospectus requirements of applicable Canadian securities laws. The Notes and the guarantees thereof will be offered and sold only to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act and to non-U.S. persons outside the United States in reliance on Regulation S under the Securities Act and prospectus exemptions under applicable Canadian securities laws and similar exemptions under the laws of the applicable jurisdictions outside of the United States and Canada.

The Notes and the related guarantees have not been registered under the Securities Act, any state securities laws, or the laws of any other jurisdiction, and the Company does not intend to register the Notes or the related guarantees. Any offer or sale of the Notes must be exempt from or not subject to the registration requirements of the Securities Act and applicable state laws and similar requirements under the laws of Canada and other jurisdictions where the Notes may be offered or sold outside of the United States and Canada.

This news release does not constitute an offer to sell, or the solicitation of an offer to buy, the Notes, nor shall there be any sale of the Notes in any jurisdiction in which such offer, solicitation or sale would be unlawful. No assurance can be made that the Offering will be consummated on its proposed terms or at all.

The Enerflex Board of Directors urges Enerflex shareholders to follow Institutional Shareholder Services' and Glass, Lewis & Co.'s recommendations to vote "FOR" the Company's proposed issuance of common shares of Enerflex to the holders of common stock of Exterran pursuant to the Transaction.

The Enerflex Special Meeting to consider and vote on the resolution in connection with the Transaction will be held at The Westin Calgary, 320 4th Avenue S.W., Calgary, Alberta, on October 11, 2022 at 9:00 a.m. (MDT), for Enerflex shareholders of record at the close of business on September 9, 2022.

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