Hanover Compressor $345 million credit facility commitments to expire Dec. 31

By Sara Rosenberg

New York, Dec. 9 - Hanover Compressor Co.'s commitments for a $345 million revolving credit facility are set to expire on Dec. 31, with closing on the loan contingent upon the successful completion of at least $275 million of new financings to refinance existing debt.

On Monday, the company announced plans to sell $200 million of senior notes due 2010 and $100 million of convertible senior notes due 2014. If Hanover completes these offerings, then it will have satisfied the new financings condition.

However, if the company is unable to close on the credit facility by the Dec. 31 deadline, then it will have to ask the banks to extend their commitments.

"There is no assurance that the banks will extend their commitments on the same terms or at all," a filing with the Securities and Exchange Commission said.

The proposed credit facility has less restrictive covenants than the company's existing credit facility. In fact, under the existing facility, there is a chance that the company may not be in compliance with the more restrictive financial covenants that will be in effect for the quarter ending March 31, 2004, according to the filing. If the company is not able to close on the proposed facility, then it plans to seek an amendment or waiver of the applicable financial covenants in the existing agreement.

J.P. Morgan Securities Inc. and Banc One Capital Markets Inc. are the co-lead arrangers on the proposed loan, with Bank One acting as syndication agent and JPMorgan Chase Bank acting as administrative agent.

The proposed revolver can have an interest rate that ranges from Libor plus 250 basis points to Libor plus 350 basis points depending on leverage (see table below). There is a commitment fee of 62.5 basis points and a final maturity date of Dec. 29, 2006, according to the filing.

Hanover Compressor is a Houston provider of full-service natural gas compression and service, fabrication and equipment for natural gas processing and transportation applications.

Hanover Compressor revolver applicable margin

Consolidated Leverage ratio Applicable Margin- Eurodollar Loans

Greater than 4-to1 3.50%

Less than or equal to 4-to-1 and greater than 3-to-1 3.00%

Less than or equal to 3-to-1 and greater than 2-to-1 2.75%

Less than or equal to 2-to-1 2.50%

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