USA Compression Partners, LP (NYSE:USAC) announced that it has entered into a security purchase agreement for private placement of 500,000 series A perpetual preferred units at a price of $1,000 per preferred unit for gross proceeds of $500,000,000 on January 15, 2018. The transaction will include participation from new investors EIG Veteran Equity Aggregator, L.P., a fund managed by EIG Management Company, LLC which will acquire 420,664.07351 series A perpetual preferred units and 420,664.07351 warrants for $420,664,073.51, Triloma EIG Energy Income Fund - Term 1 and Triloma EIG Energy Income Fund, funds managed by EIG Global Energy Partners which will acquire 4,000 series A perpetual preferred units and 4,000 warrants for $4,000,000, and FS Energy and Power Fund, a fund co-managed by EIG Global Energy Partners and Franklin Square Holdings, L.P. which will acquire 75,335.92649 series A perpetual preferred units and 753,359.2649 warrants for $75,335,926.49. The company will also issue two tranches of warrants to the purchasers, which will include warrants to purchase 5,000,000 common units with a strike price of $17.03 per common unit and warrants to purchase 10,000,000 common units with a strike price of $19.59. The warrants may be exercised by the holders thereof at any time beginning on the one year anniversary of the closing date and before the 10th anniversary of the closing date. Upon issuance, the Preferred Units will entitle the purchasers to receive cumulative quarterly distributions at a rate of 9.75% per annum, subject to increase in certain limited circumstances. While the preferred units are outstanding, the company will be prohibited from paying distributions on any junior securities, including the common units, prior to paying the quarterly distribution payable to the holders of the preferred units, including any previously accrued and unpaid distributions. For the remainder of the quarter in which the closing date occurs and for the four full quarters following the closing date, the quarterly distribution for the preferred units may be paid, at the option of the company, in cash or a combination of additional preferred units and cash. If the company pays any distributions in PIK units, the number of PIK units to be issued shall equal the quotient of the amount of the quarterly distribution to be paid in PIK units, divided by the preferred unit purchase price; provided, that the portion of the distribution rate paid in PIK units shall not exceed the rate calculated by multiplying the distribution rate by a ratio of 4.75/9.75. Beginning with the fifth full quarter following the closing date, all distributions on the preferred units shall be paid in cash. The preferred units will have a perpetual term, unless converted or redeemed as described below. The preferred units will be convertible into common units at the election of the holders from and after the third anniversary of the closing, 33.33% of the preferred units issued on the date of the closing, plus all of the PIK units issued as quarterly distributions on such preferred units, shall be convertible; from and after the fourth anniversary of the closing, 66.66% of the preferred units issued on the date of the closing, plus all of the PIK units issued as quarterly distributions on such preferred units, shall be convertible; and from and after the fifth anniversary of the closing, all of the preferred units shall be convertible. Each Preferred unit will be convertible into a number of common Units equal to the preferred unit purchase price divided by $20.0115. If the investors have not elected to convert their preferred units by the fifth anniversary of the issue date, the company will have the option to redeem all or any portion of the preferred units, in an amount not less than $25,000,000, for cash at a price equal to 105% of the sum of the preferred unit purchase price and any accrued and unpaid distributions. At the closing, pursuant to a board representation agreement, the investors will receive certain designation rights with respect to the board of directors. The company will pay 1% as structuring and origination fee and 1% commitment fees to the purchasers at the closing, as well as reimburse the purchasers for up to $400,000 of certain expenses incurred in connection with the transaction.