Item 8.01 Other Events
As previously disclosed, on January 24, 2022, Exterran Corporation, a Delaware
corporation ("Exterran"), Enerflex Ltd., a Canadian corporation ("Enerflex") and
Enerflex US Holdings Inc., a Delaware corporation and a direct wholly-owned
subsidiary of Enerflex ("Merger Sub"), entered into a definitive Agreement and
Plan of Merger (the "Merger Agreement"). Pursuant to the Merger Agreement, and
subject to the terms and conditions thereof, Merger Sub will merge with and into
Exterran (the "Merger"), with Exterran surviving the Merger as a direct and
wholly-owned subsidiary of Enerflex.
In connection with the Merger, Enerflex filed with the Securities and Exchange
Commission (the "SEC") a registration statement on Form F-4 (as amended, the
"Form F-4"). On September 9, 2022, Exterran filed a definitive proxy
statement/prospectus (the "Proxy Statement/Prospectus") with the SEC for the
solicitation of proxies in connection with the special meeting of Exterran's
stockholders to be held on October 11, 2022, for purposes of voting, among other
things, on a proposal to approve and adopt the Merger Agreement and the
transactions contemplated thereby, including the Merger.
As previously disclosed, following announcement of the merger, five purported
stockholders of Exterran filed substantially similar lawsuits under
Section 14(a) and Section 20(a) of the Securities Exchange Act of 1934 (the
"Complaints"). One suit was filed in the U.S. District Court for the Southern
District of New York. Two were filed in the U.S. District Court for the Eastern
District of New York. One suit was filed in the U.S. District Court for the
Eastern District of Pennsylvania. The fifth suit was filed in the U.S. District
Court for the District of Delaware. The suit filed in the U.S. District Court
for the Southern District of New York, along with one of the two suits filed in
the U.S. District Court for the Eastern District of New York, have been
voluntarily dismissed. The other three suits remain pending. The Complaints
assert claims that Exterran made misleading or materially incomplete disclosures
regarding the merger in the Form F-4, including but not limited to claims that
the Form F-4 omitted material information regarding the financial projections
provided to Exterran's financial advisor, the valuation analyses performed by
Exterran's financial advisor, and alleged conflicts of Exterran officers and
directors with respect to the merger. The Complaints generally name Exterran and
its directors as defendants and seek declarative and injunctive relief, damages,
costs, expenses, and other relief. In addition to the Complaints, purported
stockholders of Exterran have delivered demand letters to Exterran that, among
other things, allege the disclosure contained in the Proxy Statement/Prospectus
is deficient and request that Exterran supplement such disclosure prior to the
Exterran special meeting (the "Demand Letters").
Exterran and the Exterran board believe the Complaints and the Demand Letters
are without merit, that the Proxy Statement/Prospectus fully complies with the
Exchange Act and all other applicable law, and that no further disclosure is
required. However, solely in order to avoid the risk of delaying or otherwise
adversely affecting the consummation of the merger and to minimize the expense
and distraction of defending such actions, Exterran hereby voluntarily amends
and supplements the Proxy Statement/Prospectus as set forth in this Current
Report on Form 8-K. Nothing in the supplemental disclosures set forth below
should be deemed an admission of the legal necessity or materiality under
applicable laws of any of the disclosures set forth herein.
The Exterran board unanimously recommends that Exterran stockholders vote "FOR"
each of the Exterran proposals at the Exterran special meeting, each as
described in the Proxy Statement/Prospectus.
The information contained in this Current Report on Form 8-K is incorporated by
reference into the Proxy Statement/Prospectus. All page references in this
Current Report on Form 8-K are to pages of the Proxy Statement/Prospectus and to
the corresponding pages of the preliminary proxy statement/prospectus included
in the Form F-4, and all terms used in this Current Report on Form 8-K, but not
otherwise defined, shall have the meanings ascribed to such terms in the Proxy
Statement/Prospectus. The following information should be read in conjunction
with the Proxy Statement/Prospectus and the Form F-4, which should be read in
their entirety. To the extent that information in this Current Report on Form
8-K differs from or updates information contained in the Proxy
Statement/Prospectus or the Form F-4, the information in this Current Report on
Form 8-K shall supersede or supplement such information in the Proxy
Statement/Prospectus or the Form F-4.
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Supplemental Disclosures to the Proxy Statement/Prospectus
Exterran has agreed to make these supplemental disclosures to the Proxy
Statement/Prospectus. This supplemental information should be read in
conjunction with the Proxy Statement/Prospectus, which should be read in its
entirety. Defined terms used but not defined below have the meanings set forth
in the Proxy Statement/Prospectus. All page references in the information below
are to pages in the Proxy Statement/Prospectus. Paragraph references used herein
refer to the Proxy Statement/Prospectus before any additions or deletions
resulting from the supplemental disclosures. Underlined text shows text being
added to a referenced disclosure in the Proxy Statement/Prospectus. The
information contained herein speaks only as of September 30, 2022 unless the
information indicates another date applies.
1. The section of the Proxy Statement/Prospectus entitled "The Exterran Merger
Proposal-Opinion of the Financial Advisor to Exterran-Opinion of Wells Fargo
Securities, LLC-Exterran Financial Analyses-Exterran Selected Public
Companies Analysis" is hereby amended as follows:
The seventh full paragraph on page 119 of the Proxy Statement/Prospectus is
amended and restated in its entirety to read as follows:
The companies selected by Wells Fargo Securities and the TEV/2022E EBITDA for
each of the selected companies were as follows:
TEV/2022E EBITDA
Enerflex 5.2x
Exterran 3.7x
2. The section of the Proxy Statement/Prospectus entitled "The Exterran Merger
Proposal-Opinion of the Financial Advisor to Exterran-Opinion of Wells Fargo
Securities, LLC-Exterran Financial Analyses- Exterran Selected Precedent
Transactions Analysis" is hereby amended as follows:
The following paragraph and table are added after the fifth full paragraph on
page 120 of the Proxy Statement/Prospectus:
The ratio of the target company's enterprise value to LTM Adjusted EBITDA for
the transactions selected by Wells Fargo Securities were as follows:
Enterprise Value / LTM
Target Acquiror Adjusted EBITDA
Chicago Bridge & Iron Company N.V. McDermott
International 5.9x
Axip Energy Services, LP (contact
compression and processing business and Enerflex
after-market services business) Ltd. 7.5x
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3. The section of the Proxy Statement/Prospectus entitled "The Exterran Merger
Proposal-Opinion of the Financial Advisor to Exterran-Opinion of Wells Fargo
Securities, LLC-Enerflex Financial Analyses- Enerflex Selected Public
Companies Analysis" is hereby amended as follows:
The sixth full paragraph on page 121 of the Proxy Statement/Prospectus is
amended and restated in its entirety to read as follows:
The companies selected by Wells Fargo Securities and the TEV/2022E EBITDA for
each of the selected companies were as follows:
TEV/2022E EBITDA
Enerflex 5.2x
Exterran 3.7x
Advisory Regarding Forward-Looking Information
This communication contains forward-looking information within the meaning of
applicable Canadian securities laws and within the meaning of the safe harbor
provisions of the U.S. Private Securities Litigation Reform Act of 1995. These
statements relate to the respective management expectations about future events,
results of operations and the future performance (both operational and
financial) and business prospects of Enerflex, Exterran, or the combined entity.
All statements other than statements of historical fact are forward-looking
statements. The use of any of the words "anticipate", "future", "plan",
"contemplate", "continue", "estimate", "expect", "intend", "propose", "might",
"may", "will", "shall", "project", "should", "could", "would", "believe",
"predict", "forecast", "pursue", "potential", "objective" and "capable" and
similar expressions are intended to identify forward-looking information. In
particular, this communication includes (without limitation) forward-looking
information pertaining to: the strategic rationale and financial benefits of the
transaction, including expected future financial and operating results and the
combined company's plans, objectives, expectations and intentions. This
forward-looking information is based on assumptions, estimates and analysis made
by Exterran and Enerflex and their perception of trends, current conditions and
expected developments, as well as other factors that are believed by Enerflex to
be reasonable and relevant in the circumstances and in light of the Merger.
All forward-looking information in this communication is subject to important
risks, uncertainties, and assumptions, which are difficult to predict and which
may affect Enerflex's or the combined company's operations, including, without
limitation: the satisfaction of closing conditions to the Merger in a timely
manner, if at all; receipt of all necessary regulatory and/or competition
approvals on terms acceptable to Enerflex and Exterran; the impact of economic
conditions including volatility in the price of oil, gas, and gas liquids,
interest rates and foreign exchange rates; industry conditions including supply
and demand fundamentals for oil and gas, and the related infrastructure
including new environmental, taxation and other laws and regulations; business
disruptions resulting from the ongoing COVID-19 pandemic; the ability to
continue to build and improve on proven manufacturing capabilities and innovate
into new product lines and markets; increased competition; insufficient funds to
support capital investments required to grow the business; the lack of
availability of qualified personnel or management; political unrest; and other
factors, many of which are beyond the control of Enerflex and Exterran. Readers
are cautioned that the foregoing list of assumptions and risk factors should not
be construed as exhaustive. While the parties believe that there is a reasonable
basis for the forward-looking information and statements included in this
communication, as a result of such known and unknown risks, uncertainties and
other factors, actual results, performance, or achievements could differ and
such differences could be material from those expressed in, or implied by, these
statements. The forward-looking information included in this communication
should not be unduly relied upon as a number of factors could cause actual
results to differ materially from the results discussed in these forward-looking
statements, including but not limited to: the completion and related timing for
completion of the Merger; the ability of Enerflex and Exterran to timely receive
any necessary regulatory, shareholder, stock exchange, lender, or other
third-party approvals to satisfy the closing conditions of the Merger;
interloper risk; the ability to complete the
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Merger on the terms contemplated by Enerflex and Exterran or at all; the ability
of the combined entity to realize the anticipated benefits of, and synergies
from, the Merger and the timing and quantum thereof; consequences of not
completing the Merger, including the volatility of the share prices of Enerflex
and Exterran, negative reactions from the investment community and the required
payment of certain costs related to the Merger; actions taken by government
entities or others seeking to prevent or alter the terms of the Merger;
potential undisclosed liabilities unidentified during the due diligence process;
the accuracy of the pro forma financial information of the combined entity; the
interpretation of the Merger by tax authorities; the success of business
integration and the time required to successfully integrate; the focus of
management's time and attention on the Merger and other disruptions arising from
the Merger; the ability to maintain desirable financial ratios; the ability to
access various sources of debt and equity capital, generally, and on acceptable
terms, if at all; the ability to utilize tax losses in the future; the ability
to maintain relationships with partners and to successfully manage and operate
integrated businesses; risks associated with technology and equipment, including
potential cyberattacks; the occurrence of unexpected events such as pandemics,
war, terrorist threats and the instability resulting therefrom; risks associated
with existing and potential future lawsuits, shareholder proposals and
regulatory actions; and those factors referred to under the heading "Risk
Factors" in Enerflex's Annual Information Form and Exterran's Form 10-K, each
for the year ended December 31, 2021, and in Enerflex's Management's Discussion
and Analysis and Exterran's Form 10-Q, each for the three and six months ended
June 30, 2022, located on SEDAR and EDGAR respectively. In addition, the effects
and impacts of the ongoing COVID-19 pandemic, the rapid decline in global energy
prices and the length of time to significantly reduce the global threat of
COVID-19 on Enerflex's, Exterran's, and the combined entity's respective
businesses, the global economy and markets are unknown and cannot be reasonably
estimated at this time and could cause actual results to differ materially from
the forward-looking statements contained in this communication.
The forward-looking information contained herein is expressly qualified in its
entirety by the above cautionary statement. The forward-looking information
included in this communication is made as of the date of this communication and,
other than as required by law, Enerflex and Exterran disclaim any intention or
obligation to update or revise any forward-looking information, whether as a
result of new information, future events or otherwise. This communication and
its contents should not be construed, under any circumstances, as investment,
tax or legal advice.
No Offer or Solicitation
This communication is for informational purposes only and is neither an offer to
purchase, nor a solicitation of an offer to sell, any securities or the
solicitation of any vote in any jurisdiction pursuant to the proposed business
combination (the "Transaction") between Enerflex and Exterran or otherwise, nor
shall there be any sale, issuance, or transfer of securities in any jurisdiction
in contravention of applicable law. No offer of securities shall be made, except
by means of a prospectus meeting the requirements of Section 10 of the
Securities Act of 1933, as amended.
Additional Information and Where to Find It
In connection with the proposed Transaction, Enerflex and Exterran have filed
and will file relevant materials with the SEC. These materials include a
Registration Statement containing a proxy statement/prospectus regarding each of
Enerflex and Exterran, respectively. The definitive proxy statement filed by
Exterran with the SEC on September 9, 2022 contains important information about
the proposed Transaction and related matters. The Circular contains a detailed
description of the Transaction and is available under Enerflex's SEDAR profile
at www.sedar.com, on EDGAR at www.sec.gov, and on Enerflex's website at
www.enerflex.com. INVESTORS AND SHAREHOLDERS ARE URGED AND ADVISED TO READ THE
PROXY STATEMENT AND/OR THE CIRCULAR CAREFULLY
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BECAUSE IT CONTAINS IMPORTANT INFORMATION ABOUT THE TRANSACTION AND THE PARTIES
TO THE TRANSACTION. The definitive proxy statement and other relevant materials
in connection with the Transaction and any other documents filed by Exterran
with the SEC, may be obtained free of charge at the SEC's website at
www.sec.gov, and with SEDAR, may be obtained free of charge from the SEDAR
website at www.sedar.com. The documents filed by Enerflex with the SEC and SEDAR
may also be obtained free of charge on Enerflex's website at www.enerflex.com.
Alternatively, these documents, when available, can be obtained free of charge
from Enerflex upon written request to Enerflex Ltd., Attn: Investor Relations,
Suite 904, 1331 Macleod Trail S.E., Calgary, Alberta, Canada T2G 0K3, or by
calling 1 (403) 387-6377. The documents filed by Exterran with the SEC may be
obtained free of charge at Exterran's website at www.exterran.com.
Alternatively, these documents, when available, can be obtained free of charge
from Exterran upon written request to investor.relations@exterran.com or by
calling 1 (281) 836-7000.
Participants in the Solicitation
Enerflex, Exterran, and their respective directors and executive officers may be
deemed, under SEC rules, to be participants in the solicitation of proxies from
Exterran's shareholders in connection with the Transaction. Information about
Exterran's directors and executive officers and their ownership of Exterran's
securities is set forth in the definitive proxy statement and may also be
obtained free of charge at Exterran's website at www.exterran.com.
Alternatively, these documents can be obtained free of charge from Exterran upon
written request to investor.relations@exterran.com or by calling
1 (281) 836-7000. You may obtain information about Enerflex's executive officers
and directors in Enerflex's AIF, which was filed with SEDAR on February 23,
2022. These documents may be obtained free of charge from the SEDAR website at
www.sedar.com and may also be obtained free of charge at Enerflex's website at
www.enerflex.com. Alternatively, these documents can be obtained free of charge
from Enerflex upon written request to Enerflex Ltd., Attn: Investor Relations,
Suite 904, 1331 Macleod Trail S.E., Calgary, Alberta, Canada T2G 0K3, or by
calling 1 (403) 387-6377. Additional information regarding the interests of all
such individuals in the proposed Transaction is included in the definitive proxy
statement relating to the Transaction as filed with the SEC, as amended.
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