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

KKR, a leading global investment firm, and Preferred Sands, one of NorthAmerica's largest producers of sand and resin coated proppants, todayannounced the signing of definitive agreements under which KKR, in conjunctionwith Jefferies LLC, has committed to provide a comprehensive financingsolution to refinance the company's entire capital structure. The transaction,which is subject to customary closing conditions, is expected to close on July31, 2014."This is a long-term plan that enables us to further grow our industry-leadingplatform of products and services," said Michael O'Neill, CEO of PreferredSands. “We deeply appreciate that KKR worked with us in an expedited timeframe to create a tailored solution to meet our immediate needs, with theflexibility to focus on our future growth plans and other opportunities.”Headquartered in Radnor, Pennsylvania, Preferred Sands is a leading supplierof frac sand in Canada and one of the largest suppliers in North America. TheCompany's sand is used to stimulate and maintain the flow of hydrocarbons invertically and horizontally drilled oil and natural gas wells. Preferred Sandsis also leading industry change through its offering of environmentallyfriendly resin-coated sand through its Garnet™ and Pearl™ products.Harlan Cherniak, a member of KKR's Special Situations team, said: “We believePreferred Sands has an enviable position in the marketplace, and this is aninvestment 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 theircustomers.”Over the last seven years, Preferred Sands has built a network of sand mines,processing locations and innovative products to support oil and gasdevelopment. Today, its network of mines in Arizona, Minnesota, Nebraska, andWisconsin has the capacity to produce more than 9 billion pounds of sandannually and currently distributes sand to all of the major basins in theUnited States and Canada. Earlier this month, Preferred Sands announced plansto open an additional Northern White sand plant that will expand its frac sandproduction capacity by more than four billion pounds annually.Jamison Ely, also a member of KKR's Special Situations team, added: "Theenergy industry in North America has undergone immense change and we believePreferred Sands is poised to benefit from the current positively trendingfundamentals. KKR has been a significant participant in this industrytransformation having made a number of investments throughout the energy valuechain. We have followed Preferred Sands for a long time and we think it iswell positioned to capitalize on growing demand for frac sand.”Under the agreement, KKR is providing a comprehensive capital solutionincluding debt and equity of more than $680 million. KKR is making asignificant investment primarily from the Firm's global Special Situationsfund, and KKR Capital Markets and an affiliate of Jefferies LLC jointlyunderwrote a new first lien credit facility.