HOUSTON, Oct.
19, 2018 /PRNewswire/ -- Sentinel Energy Services
Inc. ("Sentinel") (NASDAQ: STNL and STNLW), an energy-focused
special purpose acquisition company led by Chairman Andrew Gould and Chief Executive Officer
Krishna Shivram, and sponsored by
Sentinel Management Holdings LLC, an affiliate of CSL Capital
Management L.P., today announced it has entered into a definitive
agreement to acquire a majority interest in Strike Capital LLC
("Strike Capital"), which owns and operates Strike LLC ("Strike"),
a leading North America
infrastructure and integrity services and projects business. The
transaction is subject to approval by the Sentinel shareholders and
other customary closing conditions.
The combined company will have an anticipated initial total
enterprise value of approximately $854
million. Upon completion of the business combination,
which is expected to occur during the first quarter of 2019,
Sentinel will be renamed Strike Inc. and is expected to trade on
the NYSE under a new ticker "STRK". Sentinel has also obtained
commitments for a $150 million PIPE
investment at $10 per share,
including a cash commitment of $110
million by Fidelity Management and Research Company and
$40 million investment by Sentinel's
sponsor, CSL Capital Management L.P. and certain of its investment
funds, comprising a cash commitment of $22
million and the contribution of a mid-stream pipeline
services business, Invacor, valued at $18
million. These investments will be used to enhance Strike's
balance sheet following the acquisition. Strike management will
retain 75% of their existing ownership stake while OEP will retain
80% of their existing ownership stake in Strike Capital.
The business combination values Strike at a 5.4x 2019 projected
adjusted EBITDA, implying a discount of approximately 32% to
publicly traded peers. Cash proceeds from the business combination,
including the PIPE investment, is expected to be up to $477 million and will be utilized to pay
$124 million to existing shareholders
with the remaining available cash being available to pay off the
existing term loan and revolver facilities in their entirety. The
resulting strong balance sheet with net cash on hand and
approximately $200 million of
available liquidity will allow Strike to take advantage of several
growth opportunities in the robust pipeline infrastructure services
market and to provide working capital needs.
Prior to completion of the business combination, Sentinel is
expected to re-domesticate from the Cayman Islands to Delaware.
Founded in 2003 by Chief Executive Officer Steve Pate and his partners, Strike LLC is the
leading U.S. provider of full life cycle pipeline infrastructure
services, including new construction, make-ready, testing,
inspection, maintenance, repairs, rehabilitation, upgrades,
facility construction and reconnection. Strike operates in
most major energy markets and has a proven, scalable platform with
a track record of consistent growth across oil and natural gas
cycles. From the period 2007-2017, Strike generated compound annual
revenue growth of more than 35 percent with estimated 2018 revenues
of $1.8 billion.
Sentinel was formed in late 2017 for the purpose of entering
into a business combination with one or more businesses, focused on
the energy services and equipment sectors. Following its IPO
in November 2017, Sentinel began its
search for attractive assets that would benefit from Messrs.
Gould's and Shivram's operating experience, industry connections
and approach to business as well as CSL's energy services industry
focus and network of relationships. Mr. Gould had a 36-year career
with Schlumberger Ltd, retiring as Chairman and Chief Executive
Officer in 2012, after which he was Chairman of BG Group for four
years until its sale to Shell. Mr. Shivram had a
25-year career with Schlumberger Ltd, with his last role as Vice
President and Treasurer. In 2013, Mr. Shivram joined Weatherford
International plc as the Chief Financial Officer and was then
appointed Interim Chief Executive Officer in 2016 until his
departure in 2017. Following the closing, the business will
continue to be led by Strike's current Chief Executive Officer and
one of its founding partners, Steve
Pate, together with his existing management team.
Upon closing, the Board of Directors of Sentinel, will consist
of seven members, including Mr. Gould as Chairman, Mr. Shivram, Mr.
Pate, Mr. Charles Leykum, Mr.
Lee Gardner, Mr. Marc Zenner and Mr. Jon
Marshall. The combined experience of this board will be
instrumental in shaping Strike's future growth trajectory.
Mr. Gould will bring his decades of operating experience, high
level client contacts, customer outreach and extensive mergers and
acquisitions experience to provide strong and stable leadership to
the company. Mr. Shivram will bring his extensive financial and
operational experience to support the company's financial function,
mergers and acquisitions activities and investor outreach
efforts.
Mr. Gould commented, "We are delighted to have reached agreement
with Strike whose service lines, operating and safety record
represent a unique opportunity to address the rapidly growing
market for pipeline and facilities infrastructure and integrity
services. The industry is poised to embark on a secular growth
phase to build out the infrastructure needed to service the growing
global demand for oil and gas that will feed U.S. exports for years
to come. Strike is uniquely positioned to take advantage of this
trend. We have been impressed by the dedication and dynamism of the
Strike management team and their focus on long-term customer
relationships across the U.S. We look forward to working with them
to continue to grow the business both in the U.S. and other
geographies."
Mr. Pate commented, "Over the last 15 years, our employees have
worked hard to earn Strike's reputation as the leading provider of
safe, full life cycle pipeline and facilities infrastructure
services. Our client-focused solutions have enabled long-term
client partnerships, and we see our differentiated technical
expertise and execution capabilities as competitive advantages
going forward. Now, as we seek to scale, expand and add to our
successes, this merger allows us to do so as a publicly traded
entity with a strong balance sheet, access to capital markets, and
with distinguished leaders like Andrew and Krishna joining our
team. We are excited about Strike's next phase of growth and
the opportunities that lie ahead."
Strike Highlights
- Strike is a leading U.S. provider of full life cycle pipeline
and facilities infrastructure services
- Nationwide footprint with a presence in most major energy
markets
- Proven scalable platform with a track record of consistent
growth across oil and gas cycles
- Estimated 2018 revenue of $1.8
billion and estimated 2018 adjusted EBITDA of $134 million
- 35+% 10 year revenue growth for the periods of 2007-2017
- Industry leading safety track record with 0.45 Total Recordable
Incident Rate and more than 20 million man hours worked without a
lost time incident, as of September 30,
2018
Transaction Details
The proposed business combination is subject to customary
closing conditions, including regulatory approvals and the approval
of Sentinel shareholders. The combination is expected to be
completed in the first quarter of 2019.
Additional information about the proposed business combination
and related transactions will be described in Sentinel's
preliminary proxy statement relating to business combination, which
Sentinel will file with the U.S. Securities and Exchange Commission
(the "SEC"). The description of the proposed business combination
is only a summary and is qualified in its entirety by reference to
the transaction agreement, a copy of which will be filed by
Sentinel with the SEC as an exhibit to a Current Report on Form
8-K.
Advisors
Citigroup Global Markets Inc. acted as sole private placement
agent, financial advisor and capital markets advisor to Sentinel;
Winston & Strawn LLP acted as legal counsel to Sentinel. J.P.
Morgan Securities LLC acted as financial advisor to Strike;
Jones Day acted as legal counsel to
Strike.
Investor Webcast and Presentation Information
At 9 a.m. Central Time on Friday,
October 19, 2018, Sentinel will be holding an investor conference
call to discuss the transaction. For those who wish to participate,
the domestic toll-free access number is 1-877-523-5612 and the
international toll-free access number is 1-201-689-8483. Once
connected with the operator, please use the participant code
26027042# to access the Strike Transaction Announcement Investor
Call.
A replay of the call will also be available from 9 a.m. Central Time on October 19, 2018 to 11:59
p.m. Central Time on March 30,
2019. To access the replay, please use the toll-free numbers
and code indicated above.
About Sentinel
Sentinel is a special purpose acquisition company focused on the
energy services and equipment sectors and was formed for the
purpose of entering into a merger, amalgamation, capital stock
exchange, asset acquisition, stock purchase, reorganization or
similar business combination with one or more businesses. The
Company is sponsored by Sentinel Management Holdings, LLC, an
affiliate of CSL Capital Management, L.P.
About CSL Capital
CSL Capital Management, L.P. ("CSL Capital") is an
SEC-registered investment firm focused on energy services and
equipment businesses in the U.S. Headquartered in
Houston, Texas, CSL Capital was
founded in early 2008.. The current CSL Capital portfolio includes
several de novo, growth, recapitalization, and other investments.
CSL Capital's partners include financial institutions, endowments,
foundations, and family offices, among other institutional
groups. Since its 2008 inception, CSL Capital has raised in excess
of $1.5 billion in equity capital and
commitments across various investment vehicles. For more
information, please visit www.cslenergy.com
About Strike
Strike is a Texas limited
liability company and was formed in 2003. Strike provides a full
complement of pipeline infrastructure and integrity services,
including new construction, make-ready, testing, inspection,
maintenance, repairs, rehabilitation, upgrades, facility
construction and reconnection. Strike operates through multiple
locations across its national footprint, with corporate
headquarters located in The Woodlands,
Texas. Strike is controlled by a group of investment funds
managed by OEP Capital Advisors, L.P. ("One Equity Partners"
or "OEP").
Additional Information About The Business Combination And
Where To Find It
Sentinel intends to file with the SEC preliminary and definitive
proxy statements in connection with the proposed business
combination and other matters and will mail a definitive proxy
statement and other relevant documents to its shareholders as of
the record date established for voting on the proposed business
combination. Sentinel's shareholders and other interested
persons are advised to read, once available, the preliminary proxy
statement and any amendments thereto and, once available, the
definitive proxy statement, in connection with Sentinel's
solicitation of proxies for its special meeting of shareholders to
be held to approve, among other things, the proposed business
combination, because these documents will contain important
information about Sentinel, Strike and the proposed business
combination. Sentinel's shareholders may also obtain a copy of the
preliminary or definitive proxy statement, once available, as well
as other documents filed with the SEC by Sentinel, without charge,
at the SEC's website located at www.sec.gov or by directing a
request to 700 Louisiana Street, Suite 2700, Houston, Texas 77002 Attention: Kent Jamison, or by telephone at (281)
407-0686. The information contained on, or that may be
accessed through, the websites referenced in this press release is
not incorporated by reference into, and is not a part of, this
press release.
Forward-Looking Statements
This press release includes "forward-looking statements" within
the meaning of the "safe harbor" provisions of the United States
Private Securities Litigation Reform Act of 1995. Forward-looking
statements may be identified by the use of words such as
"estimate," "plan," "project," "forecast," "intend," "expect,"
"anticipate," "believe," "seek," "target" or other similar
expressions that predict or indicate future events or trends or
that are not statements of historical matters. Such forward-looking
statements with respect to the benefits of the proposed business
combination, the projections of 2018 and 2019 adjusted EBITDA and
generally the future financial performance of the combined company
following the proposed business combination, changes in the market
for Strike's services, and expansion plans and opportunities,
including future acquisition or additional business combinations
are based on current information and expectations, forecasts and
assumptions, and involve a number of judgments, risks and
uncertainties. Accordingly, forward-looking statements should
not be relied upon as representing Sentinel's, Strike's or Strike
Capital's views as of any subsequent date, and neither Sentinel nor
Strike undertakes any obligation to update forward-looking
statements to reflect events or circumstances after the date they
were made, whether as a result of new information, future events or
otherwise, except as may be required under applicable securities
laws. You should not place undue reliance on these forward-looking
statements. As a result of a number of known and unknown risks and
uncertainties, actual results or performance may be materially
different from those expressed or implied by these forward-looking
statements. Some factors that could cause actual results to differ
include, but are not limited to: (1) the occurrence of any event,
change or other circumstances that could give rise to the
termination of the transaction agreement among the equity holders
of Strike Capital and Sentinel; (2) the outcome of any legal
proceedings that may be instituted against Strike, Strike Capital
or Sentinel following announcement of the proposed business
combination and related transactions; (3) the inability to complete
the transactions contemplated by the transaction agreement among
the equity holders of Strike Capital and Sentinel due to the
failure to obtain approval of the shareholders of Sentinel or
satisfy other conditions to the closing of the proposed business
combination; (4) the ability to obtain or maintain the listing of
Sentinel's common stock on the Nasdaq Capital Market following the
proposed business combination; (5) the risk that the proposed
business combination disrupts the parties' current plans and
operations as a result of the announcement and consummation of the
transactions described herein; (6) the ability to recognize the
anticipated benefits of the proposed business combination, which
may be affected by, among other things, competition and the ability
of the combined business to grow and manage growth profitably; (7)
costs related to the proposed business combination; (8) changes in
applicable laws or regulations; (9) the possibility that Strike or
Sentinel may be adversely affected by other economic, business,
and/or competitive factors; and (10) other risks and uncertainties
indicated from time to time in the proxy statement to be filed by
Sentinel in connection with the proposed business combination,
including those under "Risk Factors" therein, and other factors
identified in Sentinel's prior and future filings with the SEC,
available at www.sec.gov.
No Offer or Solicitation
This press release is for informational purposes only and does
not constitute an offer to sell or the solicitation of an offer to
buy any securities, or a solicitation of any vote or approval, nor
shall there be any sale of securities in any jurisdiction in which
such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
jurisdiction. No portion of Sentinel's,Strike's and CSL Capital's
websites is incorporated by reference into or otherwise deemed to
be a part of this press release.
Participants in the Solicitation
Sentinel and its directors and executive officers, Strike
Capital and its directors and executive officers, and other persons
may be deemed to be participants in the solicitations of proxies
from Sentinel's shareholders in respect of the proposed business
combination. Information regarding Sentinel's and Strike Capital's
directors' and executive officers' participation in the proxy
solicitation and a description of their direct and indirect
interests will be contained in the proxy statement related to the
proposed business combination when it becomes available, and which
can be obtained free of charge from the sources indicated
above.
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SOURCE Sentinel Energy Services Inc.