Hanover Compressor amends loan to ease covenants, raise rates

By Sara Rosenberg

New York, Feb. 6 - Hanover Compressor Co. entered into an agreement with lenders to amend its $350 million revolver and certain operating leases totaling $573 million. The amendment changes financial covenants to allow greater flexibility in accessing the capacity under the revolver to support the company's short-term liquidity needs.

In addition, interest rates could be increase by up to 75 basis points on both the revolver and the bank leases, depending on the company's consolidated leverage ratio at the end of each quarter and the amount of outstanding debt.

Also, the amendment would increase the commitment fee under the revolver by 12.5 basis points at the higher end of the permitted consolidated leverage ratio, according to a news release.

In return for the amendment, the company granted lenders a security interest in the inventory, equipment and certain other property of Hanover and its domestic subsidiaries, and pledged 65% of the equity interest in Hanover's foreign subsidiaries. Furthermore, a fee of approximately $1.3 million will be paid to the lenders.

Hanover is a Houston provider of outsourced natural gas compression services.

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