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Investor Relations TETRA Technologies , Inc. Announces Divestment Of Interests In CSI Compressco LP And Related Assets For $ 30.7 Million And Announces Preliminary TETRA Only Fourth Quarter Results THE WOODLANDS , Texas , Jan. 29 , 2021 / PRNewswire / -- TETRA Technologies , Inc. ( " TETRA " or the " Company " ) ( NYSE : TTI ) announced today a series of transactions related to CSI Compressco including ( i ) the sale to Spartan Energy Partners ( " Spartan " ) of its General Partner ( " GP " ) interests , incentive distribution rights ( " IDRs " ) and 10.95 million of the 16.19 million common units TETRA owned in CSI Compressco LP ( " CSI Compressco " or " CCLP " ) for $ 13.95 million , plus a contingent payment that could increase the proceeds to $ 17.1 million if certain financial targets are met ; ( ii ) the sale of 15 large compressor units for $ 14.2 million that are subject to a lease arrangement with CSI Compressco and ( iii ) the settlement of outstanding intercompany balances for which CCLP paid TETRA $ 2.5 million , resulting in combined proceeds of approximately $ 30.7 million , or $ 33.8 million if the contingent payment is earned . As a result of these transactions , TETRA will reflect CSI Compressco as an asset held for sale and a discontinued operation in its financial statements to be included in its 2020 Form 10K , and will not consolidate CSI Compressco in TETRA's financial statements beginning in the first quarter of 2021 . TETRA's President and Chief Executive Officer , Brady Murphy , commented , " The TETRA Board and management team continue to focus on taking the necessary actions to unlock shareholder value . TETRA continues to perform well in difficult market conditions , but the consolidated debt of CSI Compressco has represented an overhang and limited the transparency of TETRA's financial position . Following our divestment of CSI Compressco's general partner , the Company will focus on our capital efficient business model that has continued to generate positive free cash flow throughout the cycles , including one of the worst our industry has ever experienced in 2020 due to COVID- 19. Our vertically integrated completion fluids business continues to generate adjusted EBITDA margins ( Adjusted EBITDA as a percentage of revenue ) in the high 20 % to low 30 % range and as mentioned in our press release earlier this month , we are leveraging the business segment's calcium chloride market position and key mineral resources to grow into the carbon capture and energy storage markets . Additionally , recent advancements in automation and the introduction of new technologies in Water Management and Flowback Services present an opportunity for this segment to generate strong returns from an ongoing rebound in the US onshore market . " TETRA is selling its controlling interests in CSI Compressco to Spartan , a Texas - based private company founded in 2010 that is a global provider of gas treating , compression and processing solutions . The management team of Spartan includes energy industry veterans from Hanover Compressor , Exterran and Ariel Corporation . Spartan's private equity financial partner is Silverhawk Capital . The details of the transactions include : • TETRA is selling 674,587 GP units and IDRs plus 10.95 million of its 16.19 million common units in CSI Compressco for $ 13.95 million . Of the $ 13.95 million , $ 13.4 million will be paid at closing on January 29 , 2021 and $ 547,624 will be paid in cash on the six - month anniversary of closing . 。 On a per unit basis , the sale represents a value of $ 1.20 per CSI Compressco unit and a 4 % premium to the CCLP 20 - day volume weighted average price ( " VWAP " ) as of January 28 , 2021. Spartan submitted a Letter of Intent to TETRA on November 25 , 2020 with the aforementioned terms , which represented a 33 % premium to the CCLP common unit price as of the close on November 24 , 2020 . • In December 2020 , TETRA received cash proceeds of $ 14.2 million from the sale to Spartan of 15 large compressors that are subject to a lease agreement with CSI Compressco . • Additionally , if certain financial targets are achieved by CSI Compressco in 2022 , TETRA will be entitled to a contingent payment from Spartan of $ 3.1 million . If achieved , such contingent payment represents an additional $ 0.269 per CCLP common unit to be paid by Spartan to TETRA , equating to a value of $ 1.469 per CCLP common unit , or a 28 % premium to the CCLP 20 - day VWAP as of January 28 , 2021 and a 63 % premium to the CCLP closing price on November 24 , 2020 . • CSI Compressco will also pay approximately $ 2.5 million of outstanding intercompany balances to TETRA . • TETRA will continue to own 5.2 million CSI Compressco common units which implies a residual value of approximately $ 6.5 million based on CSI Compressco's closing price on January 28 , 2021. TETRA's ownership in CCLP will decline from 34 % to 11 % . TETRA will maintain an ongoing unit ownership to participate in the expected recovery in CSI Compressco's business and the anticipated benefits of Spartan's sponsorship . • TETRA will provide back office G & A support to CSI Compressco under a Transition Services Agreement for an agreed upon period after closing and will be reimbursed for providing such support . The fees are consistent with the Company's existing support agreement with TETRA that will terminate in connection with the transaction . This transaction will not result in CSI Compressco issuing any equity or assuming any liabilities or incurring any incremental indebtedness . TETRA intends to use most of the proceeds , net of transaction expenses , to reduce the amount outstanding on its 2025 term loan . At the end of September 2020 , TETRA's net debt was $ 148 million , and this transaction will further improve TETRA's balance sheet and leverage . As a result of these transactions , Brady Murphy and Elijio Serrano will no longer serve as Chief Executive Officer or Chief Financial Officer , respectively , of CSI Compressco , allowing them to focus exclusively on TETRA's Completion Fluids and Products and Water Management and Flowback Services segments . The transactions are expected to be completed on January 29 , 2021 and are not subject to any regulatory reviews or approvals . TETRA is expected to report an accounting gain between $ 110 million and $ 135 million resulting from these transactions in the first quarter of 2021 . TETRA engaged Evercore Partners in 2019 to explore alternatives and options for the de - consolidation of CSI Compressco . Evercore acted as TETRA's sole financial advisor for the Spartan transaction . Financial Reporting TETRA's financial results as of and for the year ended December 31 , 2020 will reflect CSI Compressco as an asset held for sale . Assets , liabilities and results of CSI Compressco will be reported as discontinued operations . Following completion of the transactions , the results of CSI Compressco will be excluded from TETRA's financial results , other than TETRA's retained minority interest in CSI Compressco which will be reflected as an equity investment . Appendix A , which is attached to this press release , reflects TETRA's historical financial results and key financial metrics reflecting the deconsolidation of CSI Compressco's assets and operations from TETRA's financial results . Preliminary TETRA Only Fourth Quarter 2020 Results ( Unaudited ) Preliminary fourth quarter results for TETRA , excluding the CSI Compressco segment which is being divested , reflect an approximate 45 % sequential improvement in the Company's Water Management and Flowback Services revenue driven by strong growth in our proprietary Sandstorm technology and over 100 % sequential growth in our treatment and recycling revenue , which for the fourth quarter equaled our average 2019 quarterly revenue . Additionally , adjusted EBITDA margins for the Completion Fluids Services and Products segment improved