New York-based KKR has agreed to provide $680 million of debt and equity financing to Preferred Sands to refinance the company’s entire capital structure. The deal, brokered by KKR's special situations unit, has been agreed in partnership with New York-based investment bank Jefferies. The transaction is expected to close on July 31.
KKR is making the investment primarily from the firm’s global Special Situations fund. KKR Capital Markets and an affiliate of Jefferies underwrote a new first lien credit facility for the deal together. KKR closed its first special situations fund at $2 billion in January. According to executives on its earnings call earlier this week, the firm plans to start raising money for a new special situations fund soon.
Headquartered in Radnor, PA, Preferred Sands is one of the largest suppliers of fracturing sand in Canada and North America. The sand is used to stimulate and maintain the flow of hydrocarbons in vertically and horizontally drilled oil and natural gas wells.
“This is a long-term plan that enables us to further grow our industry-leading platform of products and services,” Michael O’Neill, chief executive of Preferred Sands, said in a statement. “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.”
Jamison Ely, also a member of KKR’s Special Situations team, said: “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 capitalise on growing demand for frac sand.”