Houlihan Lokey Advises Emerge Energy Services

Houlihan Lokey is pleased to announce the successful placement of a $40 million 2nd Lien Term Loan for Emerge Energy Services LP (NYSE: EMES), a portfolio company of Insight Equity. Proceeds were used to finance the acquisition of Osburn Materials, pay down a portion of the existing ABL Revolver, and pay related fees and expenses. The company's existing ABL Revolver was amended as part of the transaction to permit the acquisition and the incurrence of the 2nd Lien Term Loan. The transaction closed on April 12, 2017.

Emerge Energy Services (Emerge) is the fifth largest frac sand producer in the U.S., with an advantaged logistics network that provides direct access to the most prominent resource plays in North America. Emerge operates five dry plants and has access to four Class I railroads as well as strategically located transload locations throughout the U.S., enabling the company's position as a low-cost provider in the industry.

Osburn Materials is located approximately 25 miles south of San Antonio, Texas, where it produces and sells sports sands and building product; however, it does not yet serve the energy markets. Management estimates there are approximately 80 million tons of sand reserves, and Emerge will upgrade the existing operations for a conversion into frac sand sales. The sand reserves, which consist mostly of 40/70 and 100 mesh, meet API specifications for all grades. The acquisition provides an attractive opportunity for Emerge to expand its regional sand production capacity and offer the lowest delivered cost of sand to the Eagle Ford Basin through Osburn Materials' strong logistical infrastructure.

Insight Equity makes controlling investments in strategically viable, middle-market, asset-intensive companies across a wide range of industries. Insight Equity specializes in partnering with companies in complex and challenging situations, including corporate divestitures, aggressive growth opportunities, restructurings, and transitions from private family ownership. The firm leverages a proven, collaborative value creation model to facilitate operating enhancements and growth. Insight Equity's headquarters is located near the Dallas/Fort Worth International Airport in Southlake, Texas. The firm also has an office in New York City.

Houlihan Lokey served as exclusive placement agent for Emerge, assisting the company in arranging, structuring, and negotiating the financing during a limited period of exclusivity with Osburn Materials. Houlihan Lokey ran a targeted financing process, leveraging relationships with lenders capable of quickly deploying capital and understanding the merits of the acquisition as well as frac sand market dynamics. At a time when Emerge's larger competitors have needed to access the public equity markets to fund similar strategic transactions, Houlihan Lokey successfully secured debt financing for Emerge, avoiding dilution to its unitholders and maintaining an attractive blended cost of capital.

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