Hanover tenders for $550 million of senior notes

By Jennifer Chiou

New York, July 19 - Hanover Compressor Co. said it began a cash tender offer for $550 million of its senior notes, including its $200 million of 8 5/8% senior notes due 2010, $200 million of 9% senior notes due 2014 and $150 million of 7½% senior notes due 2013.

The Houston-based natural gas compression company said it also is soliciting consents to amend the indentures to, among other things, eliminate substantially all of the restrictive covenants and eliminate or modify certain events of default.

The consent deadline is 5 p.m. ET on Aug. 1. The offer ends at 5 p.m. ET on Aug. 17.

For each $1,000 principal amount of 8 5/8% notes, the company said it will pay the present value of $1,043.13, the redemption amount of the notes on Dec. 15, 2007, the notes' first call date, discounted using the 4.25% Treasury due Nov. 30, 2007 and a fixed spread of 50 basis points.

For each $1,000 principal amount of 9% notes, the company said it will pay the present value of $1,045, the redemption amount of the notes on June 1, 2009, the notes' first call date, discounted using the 4.875% Treasury due May 31, 2009 and 50 bps.

For each $1,000 principal amount of 7½% notes, the company said it will pay the present value of $1,037.50, the redemption amount of the notes on April 15, 2010, the notes' first call date, discounted using the 4% Treasury due April 15, 2010 and 50 bps.

Those who tender by the early deadline will receive the $30.00 consent payment, which is included in the payout.

Pricing will be set at 2 p.m. ET on Aug. 3.

Hanover said it also will pay accrued interest to the payment date.

The offer is contingent on the completion of the merger among Hanover, Universal Compression Holdings, Inc., Exterran Holdings, Inc. (formerly Iliad Holdings, Inc.) and Exterran's subsidiaries as well as the receipt of sufficient consents.

The offer is part of the refinancing plan of Hanover and Universal being implemented in anticipation of the closing of their pending merger, which is expected to occur on Aug. 20.

Wachovia Securities is the dealer manager (866 309-6316 or call collect 704 715-8341). D.F. King & Co., Inc. is the information agent (800 859-8508 or call collect 212 269-5550).

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