The parties expect:
- Merger will create a global leader in the natural gas
compression services and production and processing equipment
fabrication industry
- Anticipated annual pre-tax cost savings of approximately $50
million
- Combined company, which will have a new name, will be better
positioned to compete in the global market place
- Combination provides a larger pool of domestic contract
compression contracts and assets that can be offered for sale
to Universal Compression Partners, L.P.
- Gordon T. Hall to be Chairman
- Stephen A. Snider to be President and Chief Executive Officer
HOUSTON--(BUSINESS WIRE)--Feb. 5, 2007--Hanover Compressor Company
(NYSE:HC) (Hanover) and Universal Compression Holdings, Inc.
(NYSE:UCO) (Universal) announced today that their boards of directors
have approved a stock-for-stock merger of equals and that the
companies have signed a definitive merger agreement.
Under the terms of the merger agreement, Hanover stockholders will
receive 0.325 shares of the new company for each share of Hanover they
own, and Universal stockholders will receive 1.0 share of the new
company for each share of Universal they own. Based on the closing
market prices for the shares of both companies on February 2, 2007,
the combined company would have an equity market capitalization of
approximately $3.8 billion. It is anticipated that Hanover
stockholders initially will own about 53 percent and Universal
stockholders about 47 percent of the new company. The merger is
expected to be tax free to stockholders of both companies.
"The combination of Hanover and Universal brings together two
highly respected companies in the natural gas compression and
production and processing equipment fabrication industry. Both
companies have an excellent team of employees known for their
dedication to customer service," said Stephen A. Snider, Universal's
Chairman, President and Chief Executive Officer. "Operating under a
new corporate name, we will be able to fully leverage our combined
capabilities to provide an enhanced level of customer support and a
wider product and service offering to meet the full compression
services and production and processing equipment needs of our
customers worldwide."
John E. Jackson, Hanover's President and Chief Executive Officer,
said, "This merger will create a new company with a portfolio of high
quality assets, products, services and financial capabilities to
generate enhanced value for stockholders of both companies. It also
affords excellent opportunities for the employees and customers of
both companies to benefit from our combined global expertise in an
increasingly competitive market place."
Stephen Snider added, "The combination also provides a larger pool
of domestic contract compression customers and equipment that can be
offered for sale to Universal Compression Partners, L.P. (NASDAQ:UCLP)
over time. The transfer of these domestic contract compression assets
to Universal Compression Partners should further improve our cost of
capital, and enable us to provide our services on a more efficient
basis to our customers over the long term."
Following the merger, Stephen Snider will serve as President and
Chief Executive Officer and as a director of the new company. Gordon
T. Hall, Hanover's Chairman, will serve as Chairman of the Board of
the combined company, which will consist of ten directors, five
designated by each company. John Jackson will serve as a director of
the new company.
The merger is expected to be accretive to earnings per share for
stockholders of both companies in 2008 after achieving expected
annualized pre-tax cost savings of approximately $50 million. These
synergies are expected to arise from the closure of overlapping
facilities, increased operational efficiencies and reduction of
corporate overhead.
Additional Information about the Merger
The merger agreement provides for the formation of a new holding
company that will own all the stock of both Hanover and Universal. The
new company will be headquartered in Houston, and its common stock is
expected to be listed on the New York Stock Exchange.
The merger is subject to various conditions including approval of
the stockholders of both Hanover and Universal and customary
regulatory approvals, including the expiration or termination of the
applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976. It is anticipated that the closing of the
merger will occur in the third quarter of this year. Hanover and
Universal intend to file a proxy statement/prospectus with the
Securities and Exchange Commission as promptly as practicable after
each company files its 2006 Annual Report on Form 10-K.
Hanover Fourth Quarter Financial Results Update
Hanover also announced that, for the three months ended December
31, 2006, it expects to report revenue of $465 million to $470
million, up from $424 million in the third quarter; income from
continuing operations before income taxes and minority interest in the
range of $27 million to $31 million, compared to $23 million in the
third quarter; and backlog of $808 million, including $325 million for
compression at December 31, 2006 compared to $689 million, including
$192 million for compression at September 30, 2006. With respect to
fourth quarter income taxes, Hanover has not yet finalized its tax
analysis, but it currently expects the effective tax rate in the
fourth quarter to be less than the mid-40% range, which Hanover had
expected at the time of its third quarter 2006 conference call.
Hanover will provide more specific information in its fourth quarter
earnings conference call, which it expects to conduct on Thursday,
February 15, 2007.
Universal Fourth Quarter and Full Year Earnings Updates
Universal also announced updated revenue and earnings guidance for
the fourth quarter and full year 2006. For the three months ending
December 31, 2006, Universal expects revenue of $250 million to $255
million and earnings per diluted share of $0.66 to $0.70; this
compares to previously reported guidance of revenue of $240 million to
$250 million and earnings per diluted share of $0.70 to $0.74. The
reduced earnings guidance is primarily the result of higher labor
costs in the domestic contract compression segment. For the twelve
months ended December 31, 2006, Universal expects revenue of $945
million to $950 million and earnings per diluted share of $2.84 to
$2.88; this compares to previously reported guidance of revenue of
$935 million to $945 million and earnings per diluted share of $2.88
to $2.92. Universal's fabrication backlog was approximately $289
million at December 31, 2006. Universal plans to conduct its fourth
quarter earnings joint conference call for both Universal Compression
Holdings and Universal Compression Partners during the week of
February 26, 2007.
Conference Call for the Investment Community
A joint conference call for Hanover and Universal to discuss the
merger will be held Monday, February 5, 2007, at 10:00 a.m. Central
Time. Stephen Snider and John Jackson will make a presentation and
take questions. The call will be broadcast on Hanover's website on the
home page at www.hanover-co.com and on Universal's website in the UCO
"Investor Information" section at www.universalcompression.com, and a
replay will be available on these sites for 30 days following the
conference. Participants may also join the conference call by dialing
312-470-7273, with the passcode 6199065, five to ten minutes prior to
the scheduled start time. A replay of the call will be available by
dialing 203-369-3601, with the passcode 5252.
About Hanover Compressor Company
Hanover Compressor Company, headquartered in Houston, Texas, is a
global market leader in full service natural gas compression and a
leading provider of service, fabrication and equipment for oil and
natural gas production, processing and transportation applications.
More information can be found at www.hanover-co.com.
About Universal Compression Holdings, Inc.
Universal Compression Holdings, Inc., headquartered in Houston,
Texas, is a leading natural gas compression services company,
providing a full range of contract compression, sales, operations,
maintenance and fabrication services to the domestic and international
natural gas industry. Additional information is available at
Universal's website, www.universalcompression.com.
About Universal Compression Partners, L.P.
Universal Compression Partners, L.P. was recently formed by
Universal Compression Holdings, Inc. to provide natural gas contract
compression services to customers throughout the United States and was
started in October 2006 with an initial fleet comprising approximately
330,000 horsepower, or approximately 17 percent by available
horsepower of Universal Compression Holdings' domestic contract
compression business at that time. Universal Compression Holdings owns
approximately 51 percent of Universal Compression Partners.
Advisors
Hanover's financial advisor for the merger is Credit Suisse
Securities (USA) LLC; its principal legal advisor is Vinson & Elkins
L.L.P. Universal's financial advisor is Goldman Sachs & Co., and its
principal legal advisor is Baker Botts L.L.P.
Forward-Looking Statements
Statements about Hanover's and Universal's outlook and all other
statements in this release (and oral statements made regarding the
subjects of this release, including on the conference call announced
herein) other than historical facts are forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of
1995. These forward-looking statements rely on a number of assumptions
concerning future events and are subject to a number of uncertainties
and factors, many of which are outside Hanover's and Universal's
control, which could cause actual results to differ materially from
such statements. Forward looking information includes, but is not
limited to, statements regarding the new combined company, including
Hanover's and Universal's expected combined financial and operating
results; the expected amount and timing of cost savings and operating
synergies; the expected financial outlook of and opportunities
associated with Universal Compression Partners; and whether and when
the transactions contemplated by the merger agreement will be
consummated. Among the factors that could cause results to differ
materially from those indicated by such forward-looking statements are
the failure to realize anticipated synergies; the result of the review
of the proposed merger by various regulatory agencies and any
conditions imposed on the new company in connection with consummation
of the merger; failure to receive the approval of the merger by the
stockholders of Hanover and Universal and satisfaction of various
other conditions to the closing of the merger contemplated by the
merger agreement. These forward-looking statements are also affected
by the risk factors, forward-looking statements and challenges and
uncertainties described in Hanover's Annual Report on Form 10-K for
the twelve months ended December 31, 2005 and Universal's Transition
Report on Form 10-K for the nine months ended December 31, 2005, and
those set forth from time to time in Hanover's and Universal's filings
with the Securities and Exchange Commission, which are available
through Hanover's and Universal's websites at www.hanover-co.com and
www.universalcompression.com. Hanover and Universal expressly disclaim
any intention or obligation to revise or update any forward-looking
statements whether as a result of new information, future events, or
otherwise.
Additional Information
In connection with the proposed merger, a registration statement
of the new company, Iliad Holdings, Inc., which will include proxy
statements of Universal Compression Holdings, Inc. and Hanover
Compressor Company, and other materials, will be filed with the
Securities and Exchange Commission. INVESTORS AND SECURITY HOLDERS ARE
URGED TO CAREFULLY READ THE REGISTRATION STATEMENT AND THE PROXY
STATEMENT/PROSPECTUS AND THESE OTHER MATERIALS REGARDING THE PROPOSED
MERGER WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT UNIVERSAL, HANOVER, ILIAD HOLDINGS AND THE PROPOSED
TRANSACTION. Investors and security holders may obtain a free copy of
the registration statement and the proxy statement/prospectus when
they are available and other documents containing information about
Universal and Hanover, without charge, at the SEC's web site at
www.sec.gov, Universal's web site at www.universalcompression.com, and
Hanover's web site at www.hanover-co.com. Copies of the registration
statement and the proxy statement/prospectus and the SEC filings that
will be incorporated by reference therein may also be obtained for
free by directing a request to either Investor Relations, Universal
Compression Holdings, Inc., 713-335-7000 or to Investor Relations,
Hanover Compressor Company, 832-554-4856.
Participants in Solicitation
Hanover Compressor Company and Universal Compression Holdings,
Inc. and their respective directors, officers and certain other
members of management may be deemed to be participants in the
solicitation of proxies from their respective stockholders in respect
of the merger. Information about these persons can be found in
Hanover's and Universal's respective proxy statements relating to
their 2006 annual meetings of stockholders as filed with the SEC on
March 24, 2006 and March 15, 2006, respectively. Additional
information about the interests of such persons in the solicitation of
proxies in respect of the merger will be included in the registration
statement and the proxy statement/prospectus to be filed with the SEC
in connection with the proposed transaction.
CONTACT: Hanover Compressor Company
Lee E. Beckelman, 281-405-5194
Senior Vice President, Chief Financial Officer
Stephen P. York, 832-554-4856
Vice President, Investor Relations & Technology
or
Universal Compression Holdings, Inc.
J. Michael Anderson, 713-335-7295
Senior Vice President and Chief Financial Officer
David Oatman, 713-335-7460
Vice President, Investor Relations
SOURCE: Hanover Compressor Company and Universal Compression
Holdings, Inc.