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CCLP Series A Preferred Units CCLP Series A Preferred Units | 6 Months Ended
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Jun. 30, 2016
Notes to Financial Statements [Abstract] |
CCLP Series A Preferred Units | NOTE C – CCLP SERIES A CONVERTIBLE PREFERRED UNITS On August 8, 2016, CCLP entered into a Series A Preferred Unit Purchase Agreement (the “CCLP Preferred Unit Purchase Agreement”) with certain purchasers (collectively, the “Purchasers”) to issue and sell in a private placement (the “Private Placement”) an aggregate of 4,374,454 of CSI Compressco LP Series A Convertible Preferred Units representing limited partner interests in CCLP (the “CCLP Preferred Units”) for a cash purchase price of $11.43 per CCLP Preferred Unit (the “Issue Price”), resulting in total net proceeds to CCLP, after deducting certain offering expenses, of $49.8 million. We purchased 874,891 of the CCLP Preferred Units at the Issue Price, aggregating $10.0 million. The CCLP Preferred Units, net of the units we purchased, will be classified as long-term liabilities in our consolidated balance sheet. The net proceeds from the Private Placement will be used to pay additional offering expenses and reduce outstanding CCLP indebtedness under the CCLP Credit Agreement or the CCLP 7.25% Senior Notes. Pursuant to the Unit Purchase Agreement, in connection with the closing, CSI Compressco GP Inc (our wholly owned subsidiary) executed a Second Amended and Restated Agreement of Limited Partnership of CCLP (the “Amended and Restated CCLP Partnership Agreement”) to, among other things, authorize and establish the rights and preferences of the CCLP Preferred Units. The CCLP Preferred Units are a new class of equity security that will rank senior to all classes or series of equity securities of CCLP with respect to distribution rights and rights upon liquidation. We and the other holders of CCLP Preferred Units (each, a “CCLP Preferred Unitholder”) will receive quarterly distributions, which will be paid in kind in additional CCLP Preferred Units, equal to an annual rate of 11.00% of the Issue Price ($1.2573 per unit annualized), subject to certain adjustments. The rights of the CCLP Preferred Units include certain anti-dilution adjustments, including adjustments for economic dilution resulting from the issuance of common units in the future below a set price. A ratable portion of the CCLP Preferred Units will be converted each month over a period of thirty months beginning in the seventh calendar month following the closing (each, a “Conversion Date”), subject to certain provisions of the Amended and Restated CCLP Partnership Agreement that may delay or accelerate all or a portion of such monthly conversions. On each Conversion Date, the CCLP Preferred Units will convert into common units representing limited partner interests in CCLP in an amount equal to, with respect to each CCLP Preferred Unitholder, the number of CCLP Preferred Units held by such CCLP Preferred Unitholder divided by the number of Conversion Dates remaining, subject to adjustment described in the Amended and Restated CCLP Partnership Agreement, with the conversion price determined by a the trading prices of the common units over the previous month, among other factors, and as otherwise impacted by the existence of certain conditions related to the common units. CCLP may, at its option, pay cash, or a combination of cash and common units, to the CCLP Preferred Unitholders instead of issuing common units on any Conversion Date, subject to certain restrictions as described in the Amended and Restated CCLP Partnership Agreement and the CCLP Credit Agreement. In addition, each Purchaser may convert its CCLP Preferred Units, generally on a one-for-one basis and subject to adjustment for certain splits, combinations, reclassifications or other similar transactions and certain anti-dilution adjustments, in whole or in part, at any time following May 31, 2017 so long as any conversion is not for less than $250,000 or such lesser amount, if such conversion relates to all of such Purchaser’s remaining CCLP Preferred Units. CCLP has the right to be reimbursed for any cash distributions paid with respect to common units issued in any such optional conversion until March 31, 2018. The CCLP Preferred Units will vote on an as-converted basis with the common units and will have certain other rights to vote as a class with respect to any amendment to the Amended and Restated CCLP Partnership Agreement that would affect any rights, preferences or privileges of the CCLP Preferred Units, as more fully described in the Amended and Restated CCLP Partnership Agreement. In addition, the CCLP Preferred Unit Purchase Agreement includes certain provisions regarding change of control, transfer of CCLP Preferred Units, indemnities, and other matters described in detail in the CCLP Preferred Unit Purchase Agreement. In connection with the closing, CCLP agreed to pay a transaction fee of $1.2 million to its financial advisor for this transaction. The CCLP Preferred Unit Purchase Agreement contains customary representations, warranties and covenants of CCLP and the Purchasers. On August 8, 2016, in connection with the closing, CCLP entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with the Purchasers relating to the registered resale of the common units issuable upon conversion of the CCLP Preferred Units, including any CCLP Preferred Units issued in kind pursuant to the terms of the Amended and Restated CCLP Partnership Agreement. Pursuant to the Registration Rights Agreement, CCLP is required to file or cause to be filed a registration statement for such registered resale at its expense no later than 90 days after the closing and is required to cause the registration statement to become effective no later than 180 days after the closing, subject to certain liquidated damages set forth in the Registration Rights Agreement if such obligations are not met. CCLP 7.25% Senior Notes Purchase Agreement. On August 8, 2016, in connection with the closing of the Private Placement for CCLP Preferred Units, CCLP entered into a CCLP Note Repurchase Agreement pursuant to which it agreed to repurchase up to $20.0 million of its 7.25% Senior Notes. For further discussion of this CCLP Note Repurchase Agreement, see Note B - Long-Term Debt.

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- Definition The entire disclosure for the formation, structure, control and ownership of the partnership. Disclosures related to accounts comprising partners' capital. Includes balances of general partners' capital account, limited partners' capital account, preferred partners' capital account and total partners' capital account and units outstanding; accumulated other comprehensive income; amount and nature of changes to amount of partner's capital and units outstanding by class, rights and privileges for each class of units; distribution policies and distributions paid by unit class; impact of and correction of an error in previously issued financial statements; limitations of partners' liability; redemption, conversion and distribution policies; and deferred compensation related to the issuance of units. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 272 -SubTopic 10 -Section 50 -Paragraph 3 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=6373374&loc=d3e70478-108055 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section S99 -Paragraph 5 -Subparagraph (SAB TOPIC 4.F) -URI http://asc.fasb.org/extlink&oid=27012166&loc=d3e187171-122770 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 272 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6373374&loc=d3e70434-108055 + Details
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