18. Subsequent Events

Merger Transaction

On January 1, 2018, we entered into the Merger Agreement pursuant to which we agreed to merge the Partnership into our indirect wholly-owned subsidiary. On April 26, 2018, the Merger was completed and we acquired the 41.2 million common units of the Partnership not owned by us at a fixed exchange ratio of 1.40 shares of our common stock for each Partnership common unit for total implied consideration of approximately $625.3 million. In addition, all of the Partnership’s incentive distribution rights, which were owned indirectly by us, were canceled and ceased to exist. As a result of the completion of the Merger, common units of the Partnership are no longer publicly traded.

As we controlled the Partnership prior to the Merger and continue to control the Partnership after the Merger, the change in our ownership interest will be accounted for as an equity transaction, and no gain or loss will be recognized in our condensed consolidated statements of operations resulting from the Merger. The tax effects of the Merger will be reported as adjustments to long-term assets associated with discontinued operations, deferred income taxes, additional paid-in capital and other comprehensive income.

Amendment to the Partnership Credit Facility and Termination of the Archrock Credit Facility

On February 23, 2018, the Partnership amended the Partnership Credit Facility to, among other things:


•	increase the maximum Total Debt to EBITDA ratio (as defined in the Partnership Credit Facility agreement), effective as of the execution of Amendment No. 1 on February 23, 2018; and


•	effective upon completion of the Merger on April 26, 2018:


–	increase the aggregate revolving commitment to $1.25 billion;


–	increase the amount available for incremental increases to the commitments under the Partnership Credit Facility to $500.0 million;


–	increase the amount available for the issuance of letters of credit to $50.0 million;


–	increase the basket sizes under certain covenants including covenants limiting our ability to make investments, incur debt, make restricted payments, incur liens and make asset dispositions;


–	name Archrock Services, L.P., one of our subsidiaries, as a borrower under the Partnership Credit Facility and certain of our other subsidiaries as loan guarantors; and


–	amend the definition of “Borrowing Base” to include certain assets of ours and our subsidiaries.

On April 26, 2018, in connection with the Merger and Amendment No. 1, we also terminated the Archrock Credit Facility and repaid $63.2 million in borrowings and accrued and unpaid interest and fees outstanding. All commitments under the Archrock Credit Facility were terminated and the $15.4 million of letters of credit outstanding under the Archrock Credit Facility as of the Merger were converted to letters of credit under the Partnership Credit Facility.