HOUSTON, May 29 /PRNewswire-FirstCall/ -- Universal Compression Holdings,
Inc. (NYSE: UCO) and Universal Compression Partners, L.P. (Nasdaq: UCLP)
announced today that Universal Compression Partners has agreed to acquire from
Universal Compression Holdings a fleet of approximately 715 compressor units,
comprising approximately 270,000 horsepower, or approximately 13% (by
available horsepower) of the combined Universal Compression Holdings' and
Universal Compression Partners' domestic contract compression business. These
assets serve the compression service needs of eight customers that will become
customers of Universal Compression Partners after the closing of the
transaction. Total value of the transaction is approximately $233 million and
consideration will consist of a combination of debt assumption, cash and
issuance of new limited partner units.
Excluding the impact of the selling, general and administrative and
operating cost caps discussed below, the transaction is expected to be
accretive to Universal Compression Partners' cash distributions per unit by
approximately $0.15 to $0.20 per year. Universal Compression Partners intends
to finance this acquisition through a combination of approximately 40% debt
and 60% equity.
The transaction, which is subject to standard closing conditions,
including the expiration or termination of the applicable waiting period under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"), is
expected to close in July. In addition, Universal Compression Holdings has
the right to terminate the transaction if consideration of the transaction
under the HSR Act could be adverse to Universal Compression Holdings' proposed
merger with Hanover Compressor Company, which is expected to close in the
third quarter of 2007.
"This transaction is the next step in Universal Compression Holdings'
strategy of offering the balance of its domestic contract compression business
over time to Universal Compression Partners, which is intended to be our
primary growth vehicle for domestic contract compression," said Stephen A.
Snider, Chairman, President and Chief Executive Officer of Universal
Compression Partners' general partner and of Universal Compression Holdings.
"Universal Compression Holdings also benefits from this transaction because it
receives additional Universal Compression Partners limited partnership units,
an increase in the value of the general partner interest in Universal
Compression Partners and cash proceeds, which will be used to repay
indebtedness."
In connection with and upon closing of the transaction, the omnibus
agreement between Universal Compression Partners and Universal Compression
Holdings will be amended to reflect adjustments in the cap on selling, general
and administrative costs allocable from Universal Compression Holdings to
Universal Compression Partners based on such costs incurred by Universal
Compression Holdings on behalf of Universal Compression Partners from $2.5
million per quarter to $4.75 million per quarter and in the cap on operating
costs from $16.95 per horsepower per quarter to $18.00 per horsepower per
quarter. As previously specified in the omnibus agreement, these caps will
continue to terminate on December 31, 2008.
The board of directors of the general partner of Universal Compression
Partners approved the transaction based on a recommendation from its conflicts
committee. The conflicts committee, which is comprised entirely of
independent directors, retained independent legal and financial advisors to
assist it in evaluating and negotiating the transaction.
Forward-Looking Statements
Statements about Universal Compression Holdings' and Universal Compression
Partners' outlook and all other statements in this release (and oral
statements made regarding the subjects of this release) 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 Universal
Compression Holdings' and Universal Compression Partners' control, which could
cause actual results to differ materially from such statements. Forward-
looking information includes, but is not limited to, statements regarding the
ability of Universal Compression Holdings and Universal Compression Partners
to complete their proposed transaction and the expected timing of the closing
of the transaction; the expected level of accretion the transaction will
generate to Universal Compression Partners' cash distributions per unit;
Universal Compression Partners' expected means of financing the transaction;
the expected benefits of the transaction to Universal Compression Holdings;
Universal Compression Holdings' intention to use Universal Compression
Partners as its primary growth vehicle for contract compression and the
expected timing of the closing of Universal Compression Holdings' proposed
merger with Hanover Compressor Company. While Universal Compression Holdings
and Universal Compression Partners believe that the assumptions concerning
future events are reasonable, they caution that there are inherent
difficulties in predicting certain important factors that could impact the
future performance or results of their business. Among the factors that could
cause results to differ materially from those indicated by such forward-
looking statements are conditions in the oil and gas industry, including a
sustained decrease in the level of supply or demand for natural gas and the
impact on the price of natural gas; employment workforce factors, including
our ability to hire, train and retain key employees; our ability to timely and
cost-effectively obtain components necessary to conduct our business; changes
in political or economic conditions in key operating markets, including
international markets; the results of the review of the proposed transaction
by regulatory agencies and the failure to satisfy various other conditions to
the closing of the transaction; and changes in equity and debt markets
impacting the ability of Universal Compression Partners to finance the
transaction in the manner contemplated.
These forward-looking statements are also affected by the risk factors,
forward-looking statements and challenges and uncertainties described in
Universal Compression Holdings' Annual Report on Form 10-K for the year ended
December 31, 2006, as amended by Amendment No. 1 thereto, Universal
Compression Partners' Annual Report on Form 10-K for the year ended December
31, 2006 and those set forth from time to time in Universal Compression
Holdings' and Universal Compression Partners' filings with the Securities and
Exchange Commission ("SEC"), which are available through our website
www.universalcompression.com. Except as required by law, Universal
Compression Holdings and Universal Compression Partners 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 of Universal Compression Holdings
and Hanover Compressor Company, a registration statement of the new company,
Iliad Holdings, Inc., which includes preliminary proxy statements of Universal
Compression Holdings and Hanover, and other materials, has been filed with the
SEC. INVESTORS AND SECURITY HOLDERS ARE URGED TO CAREFULLY READ THE
PRELIMINARY PROXY STATEMENT/PROSPECTUS, WHICH IS AVAILABLE NOW, AND THE
DEFINITIVE PROXY STATEMENT/PROSPECTUS AND OTHER MATERIALS REGARDING THE
PROPOSED MERGER WHEN THEY BECOME AVAILABLE, BECAUSE THEY CONTAIN AND WILL
CONTAIN IMPORTANT INFORMATION ABOUT UNIVERSAL, HANOVER, ILIAD HOLDINGS AND THE
PROPOSED TRANSACTION. Investors and security holders may obtain a free copy of
the preliminary proxy statement/prospectus and the definitive proxy
statement/prospectus when it is available and other documents containing
information about Universal Compression Holdings and Hanover, without charge,
at the SEC's web site at www.sec.gov, Universal Compression Holdings' web site
at www.universalcompression.com, and Hanover's web site at www.hanover-co.com.
Copies of the preliminary proxy statement/prospectus, the definitive proxy
statement/prospectus and the SEC filings that are and 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
Universal Compression Holdings and Hanover 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
Universal Compression Holdings' Annual Report on Form 10-K, as amended by
Amendment No. 1, as filed with the SEC on March 1, 2007 and April 30, 2007,
respectively, and in Hanover's Annual Report on Form 10-K, as amended by
Amendment No. 1, as filed with the SEC on February 28, 2007 and April 30,
2007, respectively. Additional information about the interests of such persons
in the solicitation of proxies in respect of the merger is included in the
preliminary proxy statement/prospectus that has been filed with the SEC and
will be included in the definitive proxy statement/prospectus to be filed with
the SEC in connection with the proposed transaction.
Universal Compression Holdings, 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.
Universal Compression Partners was formed by Universal Compression
Holdings to provide natural gas contract compression services to customers
throughout the United States. Universal Compression Holdings owns
approximately 51% of Universal Compression Partners.
SOURCE
Universal Compression Holdings, Inc.; Universal Compression Partners, L.P.
CONTACT:
David Oatman, Vice President, Investor Relations of Universal
Compression, +1-713-335-7460