| | Item 7.01 | Regulation FD Disclosure. |
On January 3, 2023, ProFrac Holding Corp., a Delaware corporation (“ProFrac”), issued a press release announcing that ProFrac Holdings II, LLC (“ProFrac II LLC”), a Texas limited liability company and a subsidiary of ProFrac, completed the previously announced acquisition of REV Energy Holdings, LLC, a Colorado limited liability company (“REV”), and also completed the acquisition of Producers Services Holdings LLC.
A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
Limitation on Incorporation by Reference. The information furnished in this Item 7.01, including the press release attached hereto as Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Cautionary Note Regarding Forward-Looking Statements. Except for historical information contained in the press release attached as an exhibit hereto, the press release contains forward-looking statements that involve certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied by these statements. Please refer to the cautionary note in the press release regarding these forward-looking statements.
Acquisition of REV Energy Holdings, LLC
As previously disclosed in the Current Report on Form 8-K filed by ProFrac on December 28, 2022 with the Securities and Exchange Commission, on December 23, 2022, ProFrac II LLC entered into a Membership Interest Purchase Agreement by and among ProFrac II LLC, REV, Jason Kuzov, an individual (“Kuzov”), Michell Winnick, an individual (“Winnick”), Buffalo Creek, LLC, an Idaho limited liability company (“Buffalo Creek,” and together with Kuzov and Winnick, the “REV Sellers”) and BCKW LLC, a Colorado limited liability company (the “REV Sellers’ Representative”), pursuant to which ProFrac II LLC agreed to purchase from the REV Sellers 100% of the issued and outstanding membership interests of REV (the “REV Acquisition”).
On December 30, 2022, ProFrac II LLC consummated the REV Acquisition. The aggregate purchase price of the REV Acquisition was $140 million, consisting of (i) a number of shares of ProFrac’s Class B common stock, par value $0.01 per share, equal to $70 million, (ii) approximately $39 million in the form of a secured note payable to the REV Sellers’ Representative by ProFrac II LLC (the “REV Note”), (iii) approximately $25.5 million in cash, and (iv) approximately $5.5 million in debt assumption. A portion of the cash consideration is subject to certain customary post-closing adjustments. The Membership Interest Purchase Agreement also provides for up to $20 million of earn-out payments if certain EBITDA-based performance targets are achieved during 2023.
The REV Note bears interest at a rate of 2.25% per annum and matures on the earlier of (i) June 30, 2025 and (ii) the date on which all amounts thereunder are due and payable pursuant to the terms and conditions thereof. The REV Note is secured by ProFrac II LLC’s equity interest in REV and substantially all of the assets of REV and its wholly-owned subsidiary, REV Energy Services, LLC, a Colorado limited liability company.
Acquisition of Producers Services Holdings LLC
On January 3, 2023, ProFrac II LLC entered into a Securities Purchase Agreement by and among ProFrac II LLC, Thomas E. Potts, Jr., as trustee of the Producers Service Employee Stock Ownership Plan and Trust (the “Plan”), PSC Holdings, Inc., an Ohio corporation (“Seller”), and Producers Service Holdings LLC, a Delaware limited liability company (“Producers”), pursuant to which ProFrac II LLC agreed to purchase 100% of the issued and outstanding membership interest of Producers from Seller (such transactions contemplated by the Securities Purchase Agreement, collectively, the “Producers Acquisition”).
Subsequent to entering into the Securities Purchase Agreement, on January 3, 2023, ProFrac II LLC consummated the Producers Acquisition for approximately $35 million of total transaction value, of which approximately half is payable in shares of ProFrac’s Class A common stock, par value $0.01 per share, with the remainder consisting of cash and debt assumption. A portion of the cash consideration is subject to certain customary post-closing adjustments.
