Flowco Holdings Inc. Announces Secondary Offering of 7.8 Million Shares

Key Details of the Underwriting Agreement and Potential Impact for Investors

Flowco Holdings Inc. (NYSE: FLOC) has announced a significant secondary offering involving the sale of 7,800,000 shares of Class A Common Stock by certain selling stockholders. The offering is set at a public offering price of \$22.00 per share. The underwriters have also been granted an option to purchase up to an additional 1,170,000 shares to cover over-allotments, if any.

Key Points of the Transaction

• Underwriting Syndicate: The offering is being led by J.P. Morgan Securities LLC and Jefferies LLC, acting as joint book-running managers and representatives of the underwriters. Other underwriters include Evercore Group L.L.C., Citigroup Global Markets Inc., Piper Sandler & Co., BMO Capital Markets Corp., Tudor, Pickering, Holt & Co. Securities, LLC, Fearnley Securities AS, PEP Advisory LLC, and Pareto Securities AS.
• Distribution of Shares: The shares are being sold entirely by existing selling stockholders. Flowco Holdings Inc. will not receive any proceeds from the sale of shares by the selling stockholders, except for the repurchase of 780,000 shares as disclosed.
• Repurchase Shares: Of the shares being offered, 780,000 shares are designated as “Repurchase Shares” which Flowco Holdings Inc. intends to repurchase as part of this transaction.
• Lock-up Agreements: As part of the underwriting agreement, the company and each selling stockholder have agreed to a 45-day lock-up period following the date of the final prospectus. During this period, they are restricted from selling additional shares or securities convertible into the common stock without the prior written consent of the lead underwriters.
• Use of Proceeds: Proceeds from the sale will go to the selling stockholders, with the exception of the repurchase shares. Importantly, the company has covenanted that proceeds will not be used to fund or facilitate activities with any sanctioned persons or entities.
• Emerging Growth Company: Flowco Holdings Inc. continues to qualify as an “Emerging Growth Company” under the Securities Act, providing it with certain reporting and regulatory accommodations.
• Financial and Reporting Controls: The company affirms the maintenance of effective disclosure controls and procedures, and internal control over financial reporting, with no material weaknesses reported as of the latest evaluation.
• Listing and Trading: The Class A Common Stock will continue to be listed and traded on the New York Stock Exchange under the ticker symbol FLOC.
• Indemnification and Liability: The underwriting agreement includes standard indemnification and contribution provisions among the company, selling stockholders, and underwriters.

Shareholder Considerations and Price-Sensitive Information

• Potential Share Price Impact: The offering increases the public float of Flowco Holdings Inc.’s shares, which may affect the stock’s trading dynamics, liquidity, and potentially the market price. Large secondary offerings can sometimes result in short-term downward pressure on share prices due to the increased supply.
• No Dilution to Existing Shareholders: Since the shares are being sold by existing stockholders and not the company (except for the repurchased shares), there is no dilution of existing shareholders.
• Repurchase of Shares: The company’s intention to repurchase 780,000 shares could be viewed as a signal of management’s confidence in the company’s valuation and future prospects.
• Lock-up Period: The 45-day lock-up may provide temporary stability in the share price by limiting the number of shares that can be sold into the market during this period.
• Ongoing SEC Compliance: The company has committed to ongoing compliance with SEC filing obligations and Blue Sky laws, and will maintain the listing of its shares on the NYSE.
• No Company Proceeds (Except Repurchase): With the exception of the repurchase, the company is not raising new capital from this offering, and there is no direct impact on the company’s cash or balance sheet from the stock sale by the selling stockholders.
• Forward-Looking Statements and Risks: The company affirms that all forward-looking statements are made in good faith and based on reasonable assumptions, but as with all such statements, they are subject to risks and uncertainties.

Summary Table: Underwriter Allocations

Important Notice

For Investors: This large secondary offering and the company’s concurrent share repurchase are potentially material developments. Investors should monitor trading activity and any further company disclosures closely. The 45-day lock-up period is particularly noteworthy as it may provide short-term price support, but investors should be aware of potential increased volatility once the lock-up expires.

Disclaimer: This article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. Investors should perform their own due diligence and consult with their financial advisors before making investment decisions. The information is based on company filings and public disclosures as of the date stated and may be subject to change.

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