Benzinga | Jan 4, 2021 07:11AM EST

TETRA Technologies, Inc. Announces Plans To Deconsolidate CSI Compressco LP

THE WOODLANDS, Texas, Jan. 4, 2021 /PRNewswire/ -- TETRA Technologies, Inc. ("TETRA" or the "Company") (NYSE:TTI) today announced that as part of its ongoing strategic review, the Company is actively pursuing several options to deconsolidate CSI Compressco LP ("CSI Compressco") (NASDAQ:CCLP) from TETRA's financial statements. One option to achieve this result would involve an exchange of TETRA's general partner interest and incentive distribution rights for additional CSI Compressco common units, along with other related changes (the "GP Exchange"). A GP Exchange would streamline CSI Compressco's structure consistent with multiple peer MLP simplifications completed in the sector in recent years. The Company is also simultaneously evaluating other potential strategic transactions that would also result in a deconsolidation of CSI Compressco from TETRA's financial statements. While TETRA, CSI Compressco's Board of Directors and CSI Compressco's Conflicts Committee have established a framework for the GP Exchange with agreement on the primary financial terms, a definitive agreement has not yet been finalized nor has the Conflicts Committee provided its special approval.

TETRA's board believes the deconsolidation of CSI Compressco's operating results, and indebtedness, from TETRA's financial results would greatly simplify TETRA's financial reporting and has the potential to unlock significant value for TETRA's shareholders. However, no deconsolidation transaction has been finalized and any such transaction remains subject to completion of a definitive agreement, approval of TETRA's Board of Directors, approval of CSI Compressco's Board of Directors and Conflicts Committee (if applicable) and approval of each of TETRA's and CSI Compressco's asset-based loan ("ABL") facility lenders.

Brady Murphy, TETRA's Chief Executive Officer, commented, "TETRA and CSI Compressco have each individually performed well under very difficult market conditions in the downturns of 2015-2017 and 2020. However, the consolidated debt of CSI Compressco, which is non-recourse to TETRA, has represented an overhang on TETRA's valuation and market perception. We believe that eliminating the debt of CSI Compressco from TETRA's balance sheet will better reflect TETRA's strong performance and financial position. The Company remained adjusted EBITDA positive and free cash flow positive, even when excluding the benefit of working capital being monetized, in a very challenging environment through the first three quarters of 2020 that have been reported. At the end of September 2020, TETRA had cash on hand of $58.5 million and net debt of $158 million. TETRA had nothing drawn on its ABL and its term loan does not mature until 2025."