ARC Financial backed STEP to acquire Tucker Energy Services for US $275M

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By Ted Liu

STEP Energy Services Ltd. (TSX: STEP), a portfolio company of ARC Financial Corp., has entered into an agreement to acquire all of the issued and outstanding capital stock of Tucker Energy Services Holdings, Inc. for US $275 million in cash before closing adjustments.

ARC Financial Corp., through ARC Energy Fund 6 and ARC Energy Fund 8, controls 66.6% of the issued and outstanding common shares of STEP Energy Services.

Tulsa, Oklahoma based Tucker Energy Services is a privately owned and geographically focused provider of fracturing and completion solutions operating primarily in the SCOOP/STACK and Woodford plays in Oklahoma. The acquisition includes four fracturing spreads representing 192,500 horsepower (HP) (three spreads comprising of 142,500 HP currently operating, and a fourth fracturing spread of 50,000 HP expected to be delivered in the second quarter of 2018), two coiled tubing spreads and 15 wireline units.

The acquisition is not subject to any financing condition. STEP expects that the cash required to close the acquisition of US$275 million, before closing adjustments, will be funded with cash on hand and the net proceeds of the $50 million offering of subscription receipts, with the balance funded from borrowings under the New Credit Facilities.

STEP has obtained committed financing in respect of a $330 million revolving syndicated credit facility, $10 million operating facility and US $7.5 million operating facility. The new credit facilities will replace STEP’s existing credit facilities and are expected to be available on or prior to closing of the acquisition.

STEP has also entered into an agreement with a syndicate of underwriters co-led by CIBC Capital Markets and Peters & Co. Limited as joint bookrunners, pursuant to which the underwriters have agreed to purchase on a bought deal basis an aggregate of 5,380,000 subscription receipts at an offering price of $9.30 per subscription receipt for gross proceeds of $50 million.

CIBC Capital Markets acted as exclusive financial advisor to STEP with respect to the acquisition. Simmons & Company International and Piper Jaffray acted as exclusive financial advisor to Tucker Energy Services Ltd.

photo credit: Tucker Energy Services