A private equity fund managed by First Reserve Corp. committed to invest up to $135 million in Quanta Services Inc.
In a press release, Quanta said First Reserve Fund IX, L.P. agreed to buy 8,666,666 newly issued common shares at $3 each.
The fund also purchased, from Aquila Inc., 3,303,100 Quanta common shares at $3 each and 939,380 Series A preferred shares — convertible into 4,696,900 common shares — at $3 per common share equivalent. As a result, Aquila's ownership in Quanta was reduced to about 14 percent. The combined value of the Aquila transactions was about $49.9 million.
Quanta said it also agreed to allow the First Reserve fund to buy 2,430,741 preferred shares in a second closing, with each share to be convertible into 10 common shares. The price per common share equivalent will not be below $3 nor above $3.50, depending upon the average closing price of Quanta's common shares for a period prior to the second closing.
The second closing is conditioned on Quanta's negotiation of certain amendments with its lenders and senior secured note holders, as well as clearance under antitrust laws.
Following the second investment, First Reserve would own about 37 percent of Quanta's voting stock, assuming full conversion of the preferred shares. The fund has agreed not to exceed a 37 percent investment without the consent of Quanta's independent directors.
Quanta also said it paid Aquila about $2.2 million for certain waivers of anti-dilution rights, pre-emptive rights and limitations on the number of directors on the company's board.
First Reserve President Ben Guill will immediately join Quanta's board. After the second closing, First Reserve may designate two additional directors.
Quanta Services provides specialized contracting services for telecommunications, television and electric power industries. Independently owned First Reserve invests exclusively within the energy and energy-related sectors. It has $2.6 billion in assets under management.
Aquila Inc., Kansas City, Mo., is an energy and risk-management company.