Sixth Street Injects $600M for 27% Stake in Comstock’s Pinnacle Gas Services
CRK•Comstock Resources sold a 27% equity stake in Pinnacle Gas Services to Sixth Street for $600 million, valuing the midstream unit at a $2.2 billion enterprise value. Proceeds will retire $445 million of preferred equity and all Pinnacle debt, reducing fixed charges by approximately $40 million per year.
1. Transaction Overview
Comstock Resources sold a 27% non-controlling common equity interest in its Pinnacle Gas Services subsidiary to funds managed by Sixth Street for $600 million, valuing Pinnacle at a $2.2 billion enterprise value. The deal closed with Comstock retaining 73% controlling interest and continuing to manage operations under a services agreement.
2. Financial Impact
Proceeds from the Sixth Street investment were used to extinguish and retire $445 million of Pinnacle preferred equity securities plus accrued dividends, eliminate all outstanding indebtedness, cover transaction costs and provide working capital. This deleveraging move is expected to lower Pinnacle’s fixed annual charges by roughly $40 million.
3. Ownership Upside and Control
Comstock maintains full operational control of the Pinnacle system and stands to increase its equity stake from 73% to 80.5% if Sixth Street meets certain return hurdles, up from the 70% entitlement before preferred unit redemption. The transaction underscores validation of the value created by Comstock’s midstream infrastructure tied to its 540,000 net acres in the Western Haynesville.
