<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: August 6, 1997
(Date of earliest event reported)
EQUITY COMPRESSION SERVICES CORPORATION
(Exact name of Registrant as specified in its charter)
Oklahoma 0-18205 73-1345732
(State of Incorporation) (Commission File No.) (I.R.S Employer
Identification No.)
2501 Cedar Springs Road
Suite 600
Dallas, Texas 75201
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, Including Area Code
(214) 953-9560
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On August 6, 1997, Equity Compression Services Corporation (the "Company")
completed the acquisition of (i) all of the issued and outstanding shares of
common stock of Ouachita Energy Corporation, a Louisiana corporation ("OEC"),
(ii) substantially all of the assets of Ouachita Energy Partners, Ltd., a
Louisiana corporation ("OEP") and Ouachita Compression Group, Ltd., a Louisiana
limited liability company ("OCG") and (iii) an airplane and the real property
used by OEC in connection with the business from Dennis W. Estis (the majority
stockholder or owner of OEC, OEP & OEG) for an aggregate consideration of 7.6
million shares of the Company's Common Stock and $24 million in cash and debt
assumption. OEC, OEP & OEG are engaged in the compression services business and
the Company intends to continue in such business. Prior to this transaction
there was no material relationship between the Company and OEC, OEG or OEP.
Such acquisitions were consummated pursuant to the terms and conditions set
forth in (i) an Agreement and Plan of Merger, dated as of May 15, 1997 by and
among the Company, OEC Acquisition Corporation, OEC and Dennis W. Estis as
amended by that certain First Amendment to Agreement and Plan of Merger dated as
of July 30, 1997 (the "Merger Agreement") and (ii) an Asset Purchase and Sale
Agreement dated as of May 15, 1997, by and among the Company, OEC Acquisition
Corporation, OEP, OEG and Dennis W. Estis as amended by that certain First
Amendment to Asset Purchase and Sale Agreement dated as of July 30, 1997 (the
"Asset Purchase Agreement"). Pursuant to the Merger Agreement, OEC was merged
with and into the Company's wholly owned subsidiary, OEC Acquisition
Corporation, with OEC Acquisition Corporation being the surviving corporation of
such merger. As a result of such merger, OEC became a wholly owned subsidiary
of the Company and the former shareholders of OEC received 7.6 million shares of
the Company's common stock (the "Company Shares"). In connection with such
transaction, the Company granted certain rights to the former shareholders of
OEC with respect to the registration of the Company Shares under the Securities
Act of 1933, as amended (the "Securities Act"). Pursuant to such registration
rights, the registration of the Company Shares under the Securities Act in the
event the Company shall register equity securities under the Securities Act for
its own account or for the account of the Company's other common stockholders.
In addition, after the second anniversary of the closing, the former shareholder
of OEC have the right to require that the Company register the Company Shares
under the Securities Act.
Pursuant to the Asset Purchase Agreement, OEC Acquisition acquired (i) all
of the compressor assets held by OEP and OEG, (ii) an airplane, and
(iii) approximately 11.156 acres on which the main fabrication and storage
facilities of OEC are located. The purchase price for such assets was $24
million consisting of
-1-
<PAGE>
approximately $11,278,000 in cash and approximately $12,722,000 in the
assumption of debt. All of the assumed debt was retired with the proceedings
of the financing set forth below.
Such acquisitions were financed in part by an amendment of the Company's
existing credit facility pursuant to which the Company's borrowing base was
increased from $12.7 million to $20 million. Such loan is secured by a first
lien on all of the assets of the Company and its subsidiaries including the
assets acquired pursuant to the Merger Agreement and the Asset Purchase
Agreement.
The balance of the purchase price was financed by (i) the proceeds from the
issuance and sale of $5 million of the Company's Senior Floating Rate Term Notes
due July 31, 2004 (the "Senior Notes") to Prudential Insurance Company of
America ("Prudential") pursuant to a Note Agreement dated as of July 31, 1997
and (ii) $15 million of the Company's 10.15% Senior Subordinated Secured Notes
due July 31, 2007 (the "Subordinated Notes") issued to Prudential pursuant to a
Subordinated Note and Warrant Purchase Agreement dated July 31, 1997. The
Senior Notes are secured by guarantees of the Company's subsidiaries and a first
lien on all of the Company's and its subsidiaries assets that is pari passu with
the liens securing the Company's bank loan. The Subordinated Notes are secured
by guarantees of the Company's subsidiaries and subordinated liens that are
junior to the Senior Notes and the Company's bank loan.
In connection with the Subordinated Notes, the Company issued to Prudential
a common stock purchase warrant to acquire 1,000,000 shares of the Company's
common stock (the "Warrant") with an exercise price of $2.80 per share. The
Warrant is exercisable on or before the earlier of (i) July 31, 2007 or (ii) the
later of (a) the date that is six months after the Subordinated Notes are
prepaid and (b) July 31, 2002. In connection with the grant of the Warrant, the
Company granted certain rights to Prudential with respect to registration of the
shares (the "Warrant Shares") of the Company stock to be issued upon the
exercise of the Warrant under the Securities Act. Such registration rights are
substantially similar to the registration rights granted to the former
shareholders of OEC described above. In addition, three of the Company's
stockholders have granted participation or tagalong rights to Prudential with
respect to the Warrant Shares.
In connection with the above acquisition, two of the shareholders of OEC,
Dennis W. Estis and Andy Payne, have become directors of the Company. The
Company and one of its subsidiaries have also entered into employment agreements
with Dennis W. Estis, Andy Payne and one other OEC employee.
The issuance of the shares of Company common stock to the former
shareholders of OEC pursuant to the Merger Agreement described above was exempt
from the registration requirements of
-2-
<PAGE>
the Securities Act in reliance upon the exemption from registration provided
by Rule 506 of Regulation D promulgated under the Securities Act. The
Company's issuance, pursuant to the Warrant, of additional shares of its
common stock is also expected to be exempt from the registration requirements
of the Securities Act in reliance upon the same exemption.
ITEM 7. EXHIBITS
(a) Financial Statements of Business Acquired.
It is impracticable for the Company to provide the required financial
statements for the business acquired at the time of filing this report on Form
8-K, but the Company will file such required financial statements by amendment
to this report on Form 8-K as soon as practicable, but not later than sixty (60)
days after this report must be filed with the Securities and Exchange
Commission.
(b) Pro Forma Financial Information.
It is impracticable for the Company to provide the required financial
statements for the business acquired at the time of filing this report on Form
8-K, but the Company will file such required financial statements by amendment
to this report on Form 8-K as soon as practicable, but not later than sixty (60)
days after this report must be filed with the Securities and Exchange
Commission.
Exhibit No. Description
- ----------- -----------
2.1* Agreement and Plan of Merger dated as of May 15, 1997 by and
among the Company, OEC Acquisition Corporation, Ouachita Energy
Corporation, and Dennis W. Estis.
2.2* First Amendment to Agreement and Plan of Merger dated as of July
30, 1997 by and among the Company, OEC Acquisition Corporation,
Ouachita Energy Corporation, and Dennis W. Estis.
2.3* Asset Purchase and Sales Agreement dated as of May 15, 1997 by
and among the Company, OEC Acquisition Corporation, Ouachita
Energy Partners, Ltd., Ouachita Compression Partners, L.L.C. and
Dennis W. Estis.
2.4* First Amendment to Asset Purchase and Sales Agreement dated as of
July 30, 1997 by and among the Company, OEC Acquisition
Corporation, Ouachita Energy Partners, Ltd., Ouachita Compression
Partners, L.L.C. and Dennis W. Estis.
-3-
<PAGE>
4.1* Note Agreement dated July 31, 1997 by and between the Company and
Prudential Life Insurance Company of America.
4.2* Subordinated Note and Warrant Purchase Agreement dated July 31,
1997 by and between the Company and Prudential Life Insurance
Company of America.
4.3* Registration Rights Agreement dated as July 31, 1997 by and
between the Company and Prudential Life Insurance Company of
North America.
4.4* Participation Agreement dated July 31, 1997 by and among the
Company, Prudential Life Insurance Company of North America and
certain stockholders of the Company.
4.5* Registration Rights Agreement dated as August 6, 1997 by and
between the Company and certain stockholders named therein.
4.6* Common Stock Purchase Warrant dated July 31, 1997 issued by the
Company to Prudential Life Insurance Company of America.
10.1* Fifth Amended Revolving Credit Facility dated as of July 31,
1997 between the Company, certain of its Subsidiaries and
the Bank of Oklahoma, N.A.
10.2* Employment Agreement dated as of August 6, 1997 among
Ouachita Energy Corporation, the Company and Dennis W.
Estis.
10.3* Employment Agreement dated as of August 6, 1997 among
Ouachita Energy Corporation, the Company and Andy Payne.
10.4* Employment Agreement dated as of August 6, 1997 among
Ouachita Energy Corporation, the Company and Dan McCormick.
* Previously filed.
-4-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
EQUITY COMPRESSION SERVICES CORPORATION
By: /s/ Jack Brannon
-------------------------------------
Jack Brannon, Vice President,
Chief Financial Officer and
Treasurer
Date: August 21, 1997
-5-
