Ademi LLP is investigating CSI Compressco (NASDAQ: CCLP) for possible breaches of fiduciary duty and other violations of law in its transaction with Kodiak Gas.
In the transaction, CSI Compressco stockholders will receive only 0.086 shares of Kodiak common stock for each CSI Compressco common unit owned. The combined company will have an "Up-C" structure at closing, and CSI Compressco unitholders meeting certain requirements will have the ability to elect to receive 0.086 limited liability company units representing economic interests in Kodiak's operating subsidiary (along with an equal number of shares of non-economic voting preferred stock of Kodiak) for each CSI Compressco common unit they hold. Each such unit will be redeemable at the option of the holder for one share of Kodiak common stock (along with cancellation of a corresponding share of preferred stock), following a six month post-closing lock-up and subject to certain conditions. Upon closing, CSI Compressco unitholders will own approximately 14% of the combined company on a fully diluted basis.
The transaction agreement unreasonably limits competing transactions for CSI Compressco by imposing a significant penalty if CSI Compressco accepts a competing bid. CSI Compressco insiders will receive substantial benefits as part of change of control arrangements.
We are investigating the conduct of CSI Compressco’s board of directors, and whether they are fulfilling their fiduciary duties to all shareholders.