The indenture governing the 8.5% Notes permits the redemption of all of the 8.5% Notes at a redemption price of 100% plus accrued and unpaid interest to the date fixed for redemption. The indenture governing the 8.75% Notes permits the redemption of all of the 8.75% Notes at a redemption price of 102.917% plus accrued and unpaid interest to the date fixed for redemption. The redemption date of both series of Notes is September 17, 2007.
To commence the redemption process, Hanover Compression Limited Partnership, an indirect wholly owned subsidiary of Hanover ("HCLP"), exercised its option to purchase from HET 2001A the gas compression equipment currently under lease to HCLP from HET 2001A, and HCLP exercised its option to purchase from HET 2001B the gas compression equipment currently under lease from HET 2001B. HCLP expects to pay HET 2001A approximately $137.7 million and to pay HET 2001B approximately $266.3 million for the equipment on the date the Notes are redeemed. The trusts will then use the proceeds from the equipment sale to fund the redemption of the Notes and the related trust equity certificates.
U.S. Bank Trust National Association is the trustee and redemption agent for the Notes. Formal notice of the redemption setting forth the redemption procedures was sent to noteholders on August 17, 2007.
The redemption of the Notes is part of the refinancing plan of Hanover and Universal Compression Holdings, Inc. ("Universal") being implemented in anticipation of the closing of their pending merger, which is currently expected to occur on or about August 20, 2007, if the conditions to the closing have been satisfied as of that date. As part of the refinancing plan, Exterran Holdings, Inc., which will be the publicly traded holding company following the completion of the merger, has engaged Wachovia Capital Markets, LLC and J. P. Morgan Securities Inc. to arrange and syndicate a senior secured credit facility, consisting of a revolving credit facility and a term loan, and has engaged Wachovia to provide a new asset-backed securitization facility to Exterran. The primary purpose of these new facilities will be to fund the redemption or repurchase of all of Hanover's and Universal's outstanding debt other than Hanover's convertible debt securities and the credit facility of Universal's publicly traded subsidiary, Universal Compression Partners, L.P. The new facilities will replace Hanover's and Universal's existing bank lines and Universal's existing asset-backed securitization facility. The closing of the new facilities is subject to, among other things, the receipt of sufficient commitments from participating lenders and the execution of mutually satisfactory documentation.
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