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KKR Announces Deal to Provide Comprehensive Capital Structure Solution to Preferred Sands

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KKR, a leading global investment firm, and Preferred Sands, one of North
America's largest producers of sand and resin coated proppants, today
announced the signing of definitive agreements under which KKR, in conjunction
with Jefferies LLC, has committed to provide a comprehensive financing
solution to refinance the company's entire capital structure. The transaction,
which is subject to customary closing conditions, is expected to close on July
31, 2014.

"This is a long-term plan that enables us to further grow our industry-leading
platform of products and services," said Michael O'Neill, CEO of Preferred
Sands. “We deeply appreciate that KKR worked with us in an expedited time
frame to create a tailored solution to meet our immediate needs, with the
flexibility to focus on our future growth plans and other opportunities.”

Headquartered in Radnor, Pennsylvania, Preferred Sands is a leading supplier
of frac sand in Canada and one of the largest suppliers in North America. The
Company's sand is used to stimulate and maintain the flow of hydrocarbons in
vertically and horizontally drilled oil and natural gas wells. Preferred Sands
is also leading industry change through its offering of environmentally
friendly resin-coated sand through its Garnet™ and Pearl™ products.

Harlan Cherniak, a member of KKR's Special Situations team, said: “We believe
Preferred Sands has an enviable position in the marketplace, and this is an
investment in the team, the technology, and the future of a growing platform.
We are pleased to partner with management and provide them with a long-term,
flexible capital structure which will allow them to meet the needs of their
customers.”

Over the last seven years, Preferred Sands has built a network of sand mines,
processing locations and innovative products to support oil and gas
development. Today, its network of mines in Arizona, Minnesota, Nebraska, and
Wisconsin has the capacity to produce more than 9 billion pounds of sand
annually and currently distributes sand to all of the major basins in the
United States and Canada. Earlier this month, Preferred Sands announced plans
to open an additional Northern White sand plant that will expand its frac sand
production capacity by more than four billion pounds annually.

Jamison Ely, also a member of KKR's Special Situations team, added: "The
energy industry in North America has undergone immense change and we believe
Preferred Sands is poised to benefit from the current positively trending
fundamentals. KKR has been a significant participant in this industry
transformation having made a number of investments throughout the energy value
chain. We have followed Preferred Sands for a long time and we think it is
well positioned to capitalize on growing demand for frac sand.”

Under the agreement, KKR is providing a comprehensive capital solution
including debt and equity of more than $680 million. KKR is making a
significant investment primarily from the Firm's global Special Situations
fund, and KKR Capital Markets and an affiliate of Jefferies LLC jointly
underwrote a new first lien credit facility.

Posted-In: News Press Releases

 

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