SecProbe.io

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March 19, 2014

Mara Ransom

Assistant Director

United States Securities and Exchange Commission

Division of Corporation Finance

100 F Street, N.E.

Washington, D.C.  20549-3561

Re:

USA   Compression Partners, LP

Registration   Statement on Form S-3

Filed   February 3, 2014

File   No. 333-193724

Ladies and Gentlemen:

Set forth below are the responses of USA Compression Partners, LP (the “Partnership”) and USA Compression Finance Corp. (“Finance Corp.” and, together with the Partnership, the “Registrants”) to the comments contained in the letter from the staff of the Division of Corporation Finance (the “Staff”) of the United States Securities and Exchange Commission (the “Commission”), dated March 4, 2014, with respect to the above-captioned filing (the “Registration Statement”).  Concurrently with the delivery of this letter to you, the Registrants are filing Amendment No. 1 to the Registration Statement to respond to the Staff’s comments (the “Amendment”).

The Registrants acknowledge that the adequacy and accuracy of the disclosure in the Registration Statement is the responsibility of the Registrants, that Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to the Registration Statement and that Staff comments may not be asserted by the Registrants as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

For your convenience, the exact text of the comments provided by the Staff has been included in bold, italicized type preceding each response in the order presented in the comment letter.

General

1.                                      We note that your debt securities may be issued by your finance subsidiary co-issuer and guaranteed by multiple subsidiaries. It does not appear that you have provided disclosure in compliance with the requirements of Rule 3-10 of Regulation S-X. Please revise to provide the appropriate disclosure pursuant to Rule 3-10 of Regulation S-X, or tell us how you believe you have complied with Rule 3-10.

RESPONSE: The Partnership may, under the Registration Statement, co-issue debt securities with Finance Corp., which debt securities may be guaranteed by USA Compression Partners, LLC, USAC Leasing, LLC, USAC Leasing 2, LLC or USAC OpCo 2, LLC (together, the “Guarantors”). Further, Finance Corp. will not independently issue debt securities.

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Under Rule 3-10(a)(1) of Regulation S-X, every issuer and every guarantor of registered debt securities must file financial statements required for a registrant under Regulation S-X.  The Registrants respectfully submit that for the following reasons, they are not required by Rule 3-10(a) of Regulation S-X to file separate financial statements for each issuer and each guarantor.  Rule 3-10(f) states:

“[w]hen a parent company issues securities and more than one of its subsidiaries of that parent company guarantee those securities, the registration statement, parent company annual report, or parent company quarterly report need not include financial statements of the issuer or any subsidiary guarantor if:

1.              Each of the subsidiary guarantors are 100% owned by the parent company guarantor;

2.              The guarantees are full and unconditional;

3.              The guarantees are joint and several; and

4.              The parent company’s financial statements are filed for the periods specified by §§ 210.3-01 and 210.3-02 and include, in a footnote, condensed consolidating financial information for the same periods with a separate column for:

i.                  The parent company;

ii.               The subsidiary guarantors of the parent company on a combined basis;

iii.            Any other subsidiaries of the parent company on a combined basis;

iv.           Consolidating adjustments; and

v.              The total consolidated amounts.”

Further, Note 1 to paragraph (f) provides that:

“[i]nstead of the condensed consolidating financial information required by paragraph (f)(4), the parent company’s financial statements may include a footnote stating, if true, that the parent company has no independent assets or operations, the guarantees are full and unconditional and joint and several, and any other subsidiaries of the parent company other than the subsidiary guarantors are minor. The footnote also must include the narrative disclosures specified in paragraphs (i)(9) and (i)(10) of this section.”

Further, it is our understanding that it is the view of the Staff that a guaranty is not “full and unconditional” if it contains automatic release provisions. Notwithstanding this view, the Staff has allowed issuers to continue to rely on Rule 3-10 when the other requirements of such rule are met and the release provisions are limited to customary circumstances described in Section 2510.5 of the Financial Reporting Manual (“Section 2510.5”). The circumstances described in Section 2510.5, among others, include (i) the subsidiary is sold or sells all of its assets; or (ii) the subsidiary’s guarantee of the indebtedness is terminated or released.

Finance Corp. is a wholly-owned subsidiary of the Partnership that was formed for the sole purpose of serving as a co-issuer of debt securities to be issued by it and the Partnership.  Finance Corp. has no assets, liabilities or operations independent of this function.

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Any securities co-issued by the Partnership and Finance Corp. will be issued jointly and severally for the purpose of Note 3 to Paragraph (f), which permits the Registrants to avail themselves of the exemptions of Paragraph (f).  In the event that a class of debt securities will be guaranteed, the indenture governing such debt securities will provide that the securities will be fully and unconditionally guaranteed by each of the applicable Guarantors, except, subject to certain limitations, as follows: (i) upon the sale, exchange or transfer, whether by way of a merger or otherwise, to any Person that is not an Affiliate of the Partnership, of all the Partnership’s direct or indirect limited partnership or other equity interest in such Subsidiary Guarantor; or (ii) upon the Issuers’ delivery of a written notice to the Trustee of the release or discharge of all guarantees by such Subsidiary Guarantor of any Debt of the Issuers other than obligations arising under this Indenture and any Debt Securities issued hereunder, except a discharge or release by or as a result of payment under such guarantees (as such capitalized terms are defined in the Form of Indenture filed as exhibit 4.1 to the Amendment). Each of the Guarantors is a wholly-owned subsidiary of the Partnership, and the Guarantors are the only subsidiaries of the Partnership other than Finance Corp.

The Registrants have revised the Registration Statement to state the following disclosure under the heading “Description of Debt Securities”:

. . . USA Compression Finance Corp. is wholly-owned by USA Compression Partners, LP, and has no material assets or any liabilities other than as a co-issuer of debt securities. Its activities are limited to co-issuing debt securities and engaging in other activities incidental thereto. Any debt securities co-issued by USA Compression Partners, LP and USA Compression Finance Corp. will be issued jointly and severally. . . .

In the event that USA Compression Partners, LLC, USAC Leasing, LLC, USAC Leasing 2, LLC or USAC OpCo 2, LLC, each of which is a wholly-owned subsidiary of USA Compression Partners, LP, guarantees any series of the debt securities described in this prospectus, such guarantees will be full and unconditional and made on a joint and several basis for the benefit of each holder and the Trustee. However, such guarantees are subject to release, subject to certain limitations, as follows (i) upon the sale, exchange or transfer, whether by way of a merger or otherwise, to any Person that is not an Affiliate of the Partnership, of all the Partnership’s direct or indirect limited partnership or other equity interest in such Subsidiary Guarantor; or (ii) upon the Issuers’ delivery of a written notice to the Trustee of the release or discharge of all guarantees by such Subsidiary Guarantor of any Debt of the Issuers other than obligations arising under this Indenture and any Debt Securities issued hereunder, except a discharge or release by or as a result of payment under such guarantees (as such capitalized terms are defined in the Form of Indenture filed as exhibit 4.1 herein). . . .

The guarantors referred to in the preceding paragraph are our only existing subsidiaries, other than USA Compression Finance. We have no assets or operations independent of our subsidiaries, and there are no significant restrictions upon our ability to obtain funds from our subsidiaries by dividend or loan. None of the assets of our subsidiaries represent restricted net assets pursuant to Rule 4-08(e)(3) of Regulation S-X under the Securities Act. . . .

The Partnership proposes to include the narrative information set forth in the paragraphs above in accordance with Note 4 of Rule 3-10(f) and paragraphs (i)(9) and (i)(10) of Rule 3-10 in the Partnership’s consolidated financial statements filed with the Partnership’s future annual reports on Form 10-K and quarterly reports on Form 10-Q.  The Partnership currently has no plans to issue indebtedness or guarantees under the Registration Statement and will file the required financial statements prior to issuing any indebtedness or guarantees under the Registration Statement.

See pages 41 and 42 of the Amendment.

2.                                      We note that you are registering 23,866,338 common units representing limited partner interests in this offering on behalf of USA Compression Holdings, LLC, which owns all of the ownership interest in your general partner and therefore appears to be your

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parent company. Given the nature of USA Compression Holdings’ relationship to you and the size of the offering relative to the number of units outstanding held by non-affiliates, it appears that the sale of units by USA Compression Holdings is a transaction that is not eligible to be made on a shelf basis pursuant to Rule 415(a)(1)(i) of Regulation C and instead represents a primary offering. Please refer to Securities Act Rules Compliance and Disclosure Interpretations 212.15 and 612.09. Please revise to identify USA Compression Holdings as an underwriter within the meaning of Section 2(a)(11) of the Securities Act and otherwise revise your prospectus to reflect that the offering by USA Compression Holdings is a primary offering. Alternatively, please provide us with your detailed analysis of why you believe you are able to conduct a secondary offering with regard to the common units held by USA Compression Holdings pursuant to Rule 415(a)(1)(i), including in such analysis a detailed description of the relationship between you and USA Compression Holdings, an analysis of whether USA Compression Holdings is your parent and affiliate, and the other factors set forth in Securities Act Rules Compliance and Disclosure Interpretation 612.09.

RESPONSE:         The Partnership respectfully submits that the offering by USA Compression Holdings, LLC (“Holdings”) is eligible to be made on a shelf basis pursuant to Rule 415(a)(1)(x) of Regulation C. Under Rule 415(a)(1)(x), securities may be registered on Form S-3 in the event they are to be offered and sold on an immediate, continuous or delayed basis by or on behalf of a person of which the registrant is a majority-owned subsidiary. Under Rule 405, a “majority-owned subsidiary” means a subsidiary of which more than 50 percent of the outstanding securities representing the right, other than as affected by events of default, to vote for the election of directors, is owned by the subsidiary’s parent and/or one or more of the parent’s majority-owned subsidiaries. Holdings owns 100 percent of the outstanding securities of the general partner of the Partnership, which has sole responsibility for conducting the Partnership’s business and for managing its operations. As sole owner of the general partner, Holdings selects the board of directors of the general partner. By virtue of such ownership of the general partner, the Partnership is a “majority-owned subsidiary” of Holdings and the registration of Holdings’ units under the Registration Statement can be made pursuant to Rule 415(a)(1)(x).

The Partnership has revised the Registration Statement to disclose that Holdings may be deemed to be an underwriter within the meaning of the Securities Act of 1933, as amended (the “Securities Act”).  Please see the cover page and page ii of the Amendment.  For the reasons set forth below, the Partnership respectfully believes that the units that may be offered by Holdings constitute a valid secondary offering and are not being offered on behalf of the Partnership.

History of Holdings; Relationship with the Partnership

On December 23, 2010, Holdings acquired the Partnership from the previous owners of the Partnership (including certain members of the Partnership’s management) in a privately negotiated transaction.  From December 23, 2010 until the Partnership’s initial public offering (the “IPO”), which closed on

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January 18, 2013, Holdings owned all of the Partnership’s limited partner interests.  In connection with the closing of the IPO the limited partner interests held by Holdings were converted into 4,048,588 common units and 14,048,588 subordinated units in the Partnership. Additionally, Holdings has elected to participate in the Partnership’s distribution reinvestment plan (the “DRIP”), whereby Holdings has received common units in the Partnership in lieu of cash distributions, and plans to continue to do so in the future. As of March 17, 2014, Holdings has received 1,289,389 common units under the DRIP. Included in the Registration Statement is the registration of 4,486,814 common units that the Partnership anticipates Holdings may receive if it continues to participate in the DRIP through the fourth quarter 2016 distribution. Holdings’ only asset is its investment in the Partnership and its general partner.

Holdings acquired its interests in the Partnership in a privately negotiated acquisition from the owners in December 2010.  Both the initial acquisition by Holdings and the conversion of the pre-IPO interests in connection with the IPO were transactions exempt from registration under the Securities Act.  Holdings acquired its interests for investment purposes, not for the purpose of making a distribution in violation of the Securities Act.

Analysis

Compliance and Disclosure Interpretation 612.09 (the “C&DI”) reads, in part, “[t]he question of whether an offering styled as a secondary one is really on behalf of the issuer is a difficult factual one, not merely a question of who receives the proceeds.  Consideration should be given to how long the selling shareholders have held the shares, the circumstances under which they received them, their relationship to the issuer, the amount of shares involved, whether the sellers are in the business of underwriting securities, and finally, whether under all the circumstances it appears that the seller is acting as a conduit for the issuer.”

The C&DI lays out six factors:

1. how long the selling shareholders have held the shares,

2. the circumstances under which they received them,

3. their relationship to the issuer,

4. the amount of shares involved,

5. whether the sellers are in the business of underwriting securities, and

6. finally, whether under all t