SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): August 31, 2001
HANOVER COMPRESSOR COMPANY
(Exact Name of Registrant as Specified in Charter)
Delaware 1-13071 75-2344249
(State or Other Jurisdiction (Commission File (IRS Employer
of Incorporation) Number) Identification No.)
12001 North Houston Rosslyn 77086
Houston, Texas 77086 (Zip Code)
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (281) 447-8787
Item 5. Other Events.
See the following press release:
HANOVER COMPRESSOR COMPLETES ACQUISITION OF NATURAL GAS COMPRESSION BUSINESS AND
RELATED ASSETS OF SCHLUMBERGER CREATING GLOBAL ALLIANCE
With Completion, Schlumberger Owns 10 Percent of Hanover; Companies Enter into a
Long-Term, Joint Business Development Effort
Strategic Acquisition Significantly Extends Hanover's Global Position;
Management Expects Strong Annual Revenue Growth Over Next Five Years
Note: Conference Call Scheduled 4 p.m. ET Tuesday, September 4
HOUSTON, September 4, 2001 -- Hanover Compressor (NYSE: HC), today announced
that it had completed its previously announced acquisition from Schlumberger
Limited of the Production Operators Corporation natural gas compression
business; ownership interests in certain joint venture projects in South
America; and related assets for $761 million.
Under the terms of the definitive agreement, Schlumberger received $270 million
in cash, $150 million in a long-term subordinated note and 8,707,693 shares of
newly issued restricted Hanover common stock having a nominal value of $283
million, based on $32.50 per share value of Hanover common stock. Additionally,
under the terms of the agreement, Schlumberger is entitled to receive a
distribution of up to $58 million upon the occurrence of certain events relating
to one of the joint ventures acquired by Hanover in the transaction. Hanover
management reconfirmed its belief that the transaction will add annual revenue
and EBITDA of at least $200 million and $90 million, respectively, within one
year.
As a part of a five-year alliance agreement between the companies, Schlumberger
has agreed to hold its ownership stake in Hanover for at least three years. In
addition, Hanover has agreed to add to its board of directors, a senior
executive of Schlumberger. The initial designee is Rene Huck, President of
Reservoir Evaluation and Development for Schlumberger Oilfield Services.
The transaction considerably enhances Hanover's position in the global
compression services and gas handling industry, significantly extends its reach
and anticipated growth in large, newly opened markets overseas, and adds
approximately 900,000 horsepower to its compression fleet and an additional
800,000 horsepower through the South American joint ventures.
"We are extremely excited to complete this transaction, which represents a
critical step in our long-term plan to meaningfully extend our position,
customer relationships and organizational capabilities as the world-wide natural
gas compression and treating services leader," said Michael J. McGhan, Hanover's
President and Chief Executive Officer. "The industry is growing rapidly as the
demand for energy accelerates. The increasing demand for our services, together
with the infrastructure we now have in place to serve our market, places Hanover
Compressor in an exceptional position to meet our customers needs and further
enhance shareholder value. We
believe this accretive multi-faceted transaction will generate strong revenue
growth for Hanover over the next five years."
Mr. McGhan noted that given Production Operators is one of the founders of the
gas compression industry, a leading and well respected force in exporting
outsourced compression services to international markets, and the training
ground of many of Hanover's own executives, integration was well underway and
should be seamless. "Like Hanover, Production Operators has built productive
relationships with many outstanding energy producers, processors and
transporters through the excellent broad-based service it provides, and we will
work together to do what is necessary to enhance and strengthen those
relationships," he said.
Under the terms of the agreement, Hanover acquired 100 percent of the gas
compression business of Schlumberger, comprised of Production Operators
Corporation, ownership interests in certain natural gas compression and gas
handling joint venture projects in South America, as well as other related
assets of Schlumberger. The terms of the related alliance will continue to allow
Schlumberger to offer world-class gas compression products and services to its
customers through a key market supplier, while Hanover will benefit from the
global presence and infrastructure of Schlumberger in its efforts to penetrate
new markets.
Under the terms of the agreement, Schlumberger will hold its Hanover stock for
at least three years after the date of closing, and will not acquire more than
25 percent of Hanover during this period. For the period of five years following
the closing date, as long as Schlumberger maintains at least 5 percent ownership
of Hanover, Schlumberger will have one seat on Hanover's board of directors.
Hanover used proceeds from a recently completed sale and leaseback transaction,
details of which were announced on August 17, 2001, to support its $270 million
cash payment to Schlumberger. Hanover was advised on the transaction by JPMorgan
Securities Inc., Goldman, Sachs & Company, and GKH Partners L.P.
To discuss this transaction further, Hanover will conduct a conference call open
to all investors as follows:
Date: Tuesday, September 4, 2001
Time: 4 p.m. ET
Dial-In #: (913) 981-4901
Ask for the Hanover Compressor conference call
For those unable to participate in the live call, a replay will be available
from 7:00 p.m. ET on Tuesday, September 4, until midnight, Tuesday, September
11. To listen to the replay, please call (719) 457-0820. The access code for the
Hanover Compressor call is 574400.
In connection with its execution of the agreement to purchase Production
Operators, Hanover has suspended the effectiveness of registration statements
numbered 333-30344, 333-50470, 333-52972 and 333-51430 until it can incorporate
audited financial data of Production Operators into them.
Hanover Compressor Company is a market leader in full service natural gas
compression and a leading provider of service, financing, fabrication and
equipment for contract natural gas handling applications. Hanover provides this
equipment on a rental, contract compression, maintenance and acquisition
leaseback basis to natural gas production, processing and transportation
companies that are increasingly seeking outsourcing solutions. Founded in 1990
and a public company since 1997, its customers include premier independent and
major producers and distributors throughout the Western Hemisphere.
Certain matters discussed in this press release are "forward-looking statements"
intended to qualify for the safe harbors from liability established by the
Private Securities Litigation Reform Act of 1995. These forward-looking
statements can generally be identified as such because of the context of the
statement and will include words such as "believes," "anticipates," "expects,"
"estimates," or words of similar import. Similarly, statements regarding the
benefits to be realized through the acquisition or the alliance or that describe
Hanover's future plans, objectives or goals are also forward-looking statements.
Such forward-looking statements are subject to certain risks and uncertainties,
which could cause actual results to differ materially from those anticipated as
of the date of this press release. The risks and uncertainties include:
difficulty in integrating Production Operators into Hanover, adverse regulatory
decisions, the loss of market share through competition; the introduction of
competing technologies by other companies; a prolonged, substantial reduction in
oil and gas prices which would cause a decline in the demand for Hanover's
compression and oil and gas production equipment; new governmental safety,
health and environmental regulations which could require Hanover to make
significant capital expenditures; inability to successfully integrate acquired
businesses; and changes in economic or political conditions in the countries in
which Hanover operates. The forward-looking statements included in this press
release are only made as of the date of this press release, and Hanover
undertakes no obligation to publicly update such forward-looking statements to
reflect subsequent events or circumstances. A discussion of these factors is
included in the Company's periodic reports filed with the Securities and
Exchange Commission.
SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HANOVER COMPRESSOR COMPANY
Date: August 31, 2001 By: /s/ Michael J. McGhan
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Name: Michael J. McGhan
Title: President and Chief Executive Officer