SSG Capital Advisors acted as the co-investment banker to Diverse Energy Systems and its subsidiary ITS Engineered Systems in both the placement of debtor-in-possession (DIP) financing from Coyote Capital Management and the sale of substantially all of its assets to Cimarron Energy, a portfolio company of Turnbridge Capital.

The sale was arranged through a Chapter 11 section 363 process in the U.S. Bankruptcy Court for the Southern District of Texas. The transactions closed in October 2015 and January 2016, respectively.

Diverse manufactures new oil and gas field service equipment to be sold on a single unit basis or as a group. The company also manufactures certain types of equipment to be used in its rental fleet. All equipment is configured to appropriately accommodate the characteristics of the specific application it will service. Additionally, Diverse offers support and maintenance services to its customers for both leased and owned equipment.

As the price of oil plummeted, Diverse faced declining sales and an inflated cost structure, and was forced to right-size the business. Despite the company’s cost-saving efforts, the continued decline in performance through Q3/15 placed additional strain on its liquidity. In September 2015, Diverse Energy Systems filed for Chapter 11 bankruptcy protection to avoid further deterioration of its business and to retain the value of its assets. ITS Engineered Systems previously filed for Chapter 11 in April 2015.

SSG was retained by Diverse in May 2015 to evaluate strategic alternatives. In addition to contacting a number of potential lenders to attempt to refinance Diverse’s debt, SSG also conducted a comprehensive marketing process to financial buyers to determine if there was an interest in creating a partnership. While multiple parties engaged in a thorough review of the business and submitted offers, it was determined that filing for Chapter 11 bankruptcy protection and beginning a sale process was the best option. SSG contacted lenders to evaluate interest in providing a DIP facility. The term sheet from Coyote Capital Management was determined to be the best offer. The financing transaction closed in October 2015.

Diverse and its advisors concluded that the best option was to proceed with a sale effectuated through a Chapter 11 Section 363 process. SSG conducted a marketing process to an assortment of buyers to structure the optimal solution for the company. Several parties engaged in a thorough review of the business. The offer from Cimarron was determined to be the highest and best offer and the sale transaction closed in January 2016.

Cimarron is a manufacturer of engineered production, process and environmental equipment for the upstream and midstream energy sectors. Turnbridge is a private equity firm that invests in middle market businesses that are directly or indirectly dependent upon energy and energy-related infrastructure spending.