SENTINEL ANNOUNCES FRIDAY MORNING, NOT AFTERNOON…A GOOD SIGN?
Sentinel Energy Services announced this morning it has entered into a definitive agreement to acquire a majority interest in Strike Capital LLC (“Strike Capital”), which owns and operates Strike LLC (“Strike”), a leading North America infrastructure and integrity services and projects business.
Founded in 2003 by Chief Executive Officer Steve Pate and his partners, Strike LLC is a provider of full life cycle pipeline infrastructure services, including new construction, make-ready, testing, inspection, maintenance, repairs, rehabilitation, upgrades, facility construction and reconnection. Strike operates in most major energy markets and has a scalable platform with a track record of consistent growth across oil and natural gas cycles. From the period 2007-2017, Strike generated compound annual revenue growth of more than 35 percent with estimated 2018 revenues of $1.8 billion.
Sentinel has also obtained commitments for a $150 million PIPE investment at $10 per share, including a cash commitment of $110 million by Fidelity Management and Research Company and $40 million investment by Sentinel’s sponsor, CSL Capital Management L.P. and certain of its investment funds, comprising a cash commitment of $22 million and the contribution of a mid-stream pipeline services business, Invacor, valued at $18 million.
Cash proceeds from the business combination, including the PIPE investment, is expected to be up to $477 million and will be utilized to pay $124 million to existing shareholders with the remaining available cash being available to pay off the existing term loan and revolver facilities in their entirety.
HIGHLIGHTS:
- Anticipated initial enterprise value of $854 million
- Strike Inc. represents the largest, pure-play pipeline and facilities infrastructure and integrity services provider across U.S. onshore energy markets and transmission corridors
- Following the business combination, Sentinel will be led by the existing management team of Strike. Andrew Gould and Krishna Shivram will be on the Board of Directors.
- Secured a $150 million PIPE commitment at $10 per share, including $110 million from Fidelity Management and Research Company and $40 million from the sponsor, CSL Capital Management, L.P.
- Strike estimated 2018 revenue of $1.8 billion and estimated 2018 adjusted EBITDA of $134 million
- Entry multiples at 6.3x 2018 projected adjusted EBITDA and 5.4x 2019 projected adjusted EBITDA
- 5.4x 2019 projected adjusted EBITDA, implying a discount of approximately 32% to publicly traded peers
- Strike: 35+% 10 year revenue growth for the periods of 2007-2017
CONSIDERATION
- $124.4 million in cash
- 30.6 million shares of common stock of the Company
INVESTOR CONFERENCE CALL
At 9 a.m. Central Time on Friday, October 19, 2018, Sentinel will be holding an investor conference call to discuss the transaction.
Domestic toll-free access number: 1-877-523-5612
International toll-free access number: 1-201-689-8483
Participant code: 26027042#
A replay of the call will also be available from 9 a.m. Central Time on October 19, 2018 to 11:59 p.m. Central Time on March 30, 2019. To access the replay, please use the toll-free numbers and code indicated above.
ADVISORS
- Citigroup Global Markets Inc. acted as sole private placement agent, financial advisor and capital markets advisor to Sentinel.
- Winston & Strawn LLP acted as legal counsel to Sentinel.
- J.P. Morgan Securities LLC acted as financial advisor to Strike
- Jones Day acted as legal counsel to Strike.
At the SPAC of Dawn As a rough week in the market comes to a close, at least one de-SPAC has some cause to show off. Many fashion brands were among the hard hit in recent days and not simply for macro reasons. Luis Vuitton-owner LVMH (PA:MC) dropped this week after an earnings miss led...
Shepherd Ave Capital Acquisition Corp. (Nasdaq: SPHAU) is the latest SPAC to file to IPO, making 24 new registration statements that have filed since June 1, 2024. So far, only two of those 24 have gone public, but it does indicate an active August. In SPACLand at least, August is never slow. As for Shepherd...
At the SPAC of Dawn SPACs have now priced 20 IPOs seven months into 2024 with an eye on beating 2023’s total of 31 IPOs. With a little more than 5 months left in the year, it’s expected that SPACs should at least match that number by only needing to price roughly two IPOs per...
DT Cloud Star announced the pricing of its $60 million IPO and its units are expected to begin trading on the Nasdaq under the symbol “DTSQU”, Thursday, July 25, 2024. The new SPAC aims to combine with an established business with long-term financial visibility, but has not limited itself to a particular industry or sector....
Launch Two (NASDAQ:LPBBU) has filed for a $200 million IPO that shows how the market has shifted for new issuance since its sister SPAC Launch One (NASDAQ:LPAAU) filed just over a month ago. Both SPACs are underwritten by Cantor Fitzgerald and seeking nominally the same raise at IPO, but Launch Two is overfunding its trust...