Kohlberg Kravis Roberts has agreed to invest $680 million in debt and equity toward a comprehensive financing of Preferred Sands, a supplier of frac sand for the North American energy industry. The deal is expected to close at the end of the month and is primarily financed by KKR’s $2 billion special situations fund. Preferred Sands had failed to make some of its loan payments last year, which reportedly led to engagement with restructuring advisors. A first lien credit facility has been underwritten by KKR Capital Markets and Jefferies.
The company’s sand is used to stimulate and maintain the flow of hydrocarbons in drilled oil and natural gas wells. Its network of mines in Arizona, Minnesota, Nebraska and Wisconsin has the capacity to produce more than 9 billion pounds of sand annually. Earlier in July, Preferred Sands announced plans to open an additional sand plant that will expand its frac sand production capacity by more than 4 billion pounds annually.