Smart Sand Inc. has completed the acquisition of the Oil and Gas Proppants segment of Eagle Materials Inc. The segment’s primary assets include frac sand mines and related processing facilities in Utica, Ill., and New Auburn, Wis., with approximately 3.5 million tons of annual processing capacity, of which approximately 1.6 million tons has access to the BNSF rail line.
Charles Young, Smart Sand’s chief executive officer stated, “We are excited about this consolidation opportunity. This acquisition provides direct access to an additional Class I rail line which allows us greater and more sustainable logistics options to continue to broaden our mine to wellsite capabilities for our customers. We believe these additional mining and logistics resources help secure Smart Sand’s ability to be the preferred provider of Northern White frac sand in the proppants market. We believe this acquisition adds valuable assets to our purpose-built portfolio and by financing this transaction with equity, we remain focused on maintaining low leverage levels.
“With this acquisition we will be able to expand our footprint into new basins, gain access to new and enhanced logistics options, broaden our customer base and complement our mine to wellsite supply and logistics capabilities. These assets complement our existing business and we are confident we will be able to expand our efficient and low-cost operating model as we continue to provide the highest-quality and most reliable supply of frac sand available on the market today,” Young stated.
The acquisition was completed on Sept. 18, for aggregate consideration of $2 million, consisting of 1,503,759 shares of newly issued Smart Sand common stock. Eagle Materials Inc. has agreed to provide initial liquidity support for the Segment to Smart Sand pursuant to one or more loans in an aggregate amount of up to $5 million, which may be issued during the first 12 months from the closing date of the acquisition.
If funded and not repaid on or before the 12-month anniversary of the closing date, such loans will mature on Sept. 18, 2024, and will be amortized over the 36 months following such anniversary.
As of Sept. 18, Smart Sand had total cash on hand of $10.8 million and no borrowings outstanding on its Credit Facility or under the liquidity support agreement.