CCLP Series A Convertiable Preferred Units CCLP Series A Preferred Units

6 Months Ended

Jun. 30, 2019

Series A Preferred Units [Abstract]

CCLP Series A Preferred Units

CCLP SERIES A CONVERTIBLE PREFERRED UNITS

During 2016, CCLP issued an aggregate of 6,999,126 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”). We purchased 874,891 of the CCLP Preferred Units at the aggregate Issue Price of $10.0 million.

Unless otherwise redeemed for cash, a ratable portion of the CCLP Preferred Units has been, and will continue to be, converted into CCLP common units on the eighth day of each month over a period of thirty months that began in March 2017 and will end in August 2019 (each, a “Conversion Date”). Based on the number of CCLP Preferred Units outstanding as of June 30, 2019, the maximum aggregate number of CCLP common units that could be required to be issued pursuant to the conversion provisions of the CCLP Preferred Units is approximately 4.3 million CCLP common units; however, CCLP may, at its option, pay cash, or a combination of cash and common units, to the holders of the CCLP Preferred Units instead of issuing common units on any Conversion Date, subject to certain restrictions as described in the Second Amended and Restated CCLP Partnership Agreement and the CCLP Credit Agreement. Beginning with the January 2019 Conversion Date, CCLP has elected to redeem the remaining CCLP Preferred Units for cash, resulting in 1,870,681 CCLP Preferred Units being redeemed during the six months ended June 30, 2019 for $19.8 million, which includes approximately $0.9 million of redemption premium that was paid and charged to other (income) expense, net in the accompanying consolidated statements of operations. The total number of CCLP Preferred Units outstanding as of June 30, 2019 was 751,736, of which we held 94,409. The final redemption of the remaining outstanding CCLP Preferred Units, along with a final cash payment made in lieu of paid in kind units for the quarter ended June 30, 2019, occurred on August 8, 2019, for an aggregate cash payment of $5.0 million of which $0.6 million was paid to us.

Based on the conversion provisions of the CCLP Preferred Units, calculated as of June 30, 2019, using the trading prices of the common units over the prior month, along with other factors, and as otherwise impacted by the existence of certain conditions related to the CCLP common units (the "Conversion Price"), the theoretical number of CCLP common units that would be issued if all of the outstanding CCLP Preferred Units were converted on June 30, 2019 on the same basis as the monthly conversions would be approximately 2.7 million CCLP common units, with an aggregate market value of $9.7 million. If converted to CCLP common units, a $1 decrease in the Conversion Price would result in the issuance of 1.3 million additional CCLP common units pursuant to these conversion provisions.