Universal Compression Partners Agrees to Acquire Additional Assets From Universal Compression Holdings


HOUSTON, May 29 -- Universal Compression Holdings, Inc. (NYSE:UCO) and Universal Compression Partners, L.P. (NASDAQ:UCLP) announced today that Universal Compression Partners has agreed to acquire from Universal Compression Holdings a fleet of approximately 715 compressor units, comprising approximately 270,000 horsepower, or approximately 13% (by available horsepower) of the combined Universal Compression Holdings' and Universal Compression Partners' domestic contract compression business. These assets serve the compression service needs of eight customers that will become customers of Universal Compression Partners after the closing of the transaction. Total value of the transaction is approximately $233 million and consideration will consist of a combination of debt assumption, cash and issuance of new limited partner units.

Excluding the impact of the selling, general and administrative and operating cost caps discussed below, the transaction is expected to be accretive to Universal Compression Partners' cash distributions per unit by approximately $0.15 to $0.20 per year. Universal Compression Partners intends to finance this acquisition through a combination of approximately 40% debt and 60% equity.

The transaction, which is subject to standard closing conditions, including the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"), is expected to close in July. In addition, Universal Compression Holdings has the right to terminate the transaction if consideration of the transaction under the HSR Act could be adverse to Universal Compression Holdings' proposed merger with Hanover Compressor Company, which is expected to close in the third quarter of 2007.

"This transaction is the next step in Universal Compression Holdings' strategy of offering the balance of its domestic contract compression business over time to Universal Compression Partners, which is intended to be our primary growth vehicle for domestic contract compression," said Stephen A. Snider, Chairman, President and Chief Executive Officer of Universal Compression Partners' general partner and of Universal Compression Holdings. "Universal Compression Holdings also benefits from this transaction because it receives additional Universal Compression Partners limited partnership units, an increase in the value of the general partner interest in Universal Compression Partners and cash proceeds, which will be used to repay indebtedness."

In connection with and upon closing of the transaction, the omnibus agreement between Universal Compression Partners and Universal Compression Holdings will be amended to reflect adjustments in the cap on selling, general and administrative costs allocable from Universal Compression Holdings to Universal Compression Partners based on such costs incurred by Universal Compression Holdings on behalf of Universal Compression Partners from $2.5 million per quarter to $4.75 million per quarter and in the cap on operating costs from $16.95 per horsepower per quarter to $18.00 per horsepower per quarter. As previously specified in the omnibus agreement, these caps will continue to terminate on December 31, 2008.

The board of directors of the general partner of Universal Compression Partners approved the transaction based on a recommendation from its conflicts committee. The conflicts committee, which is comprised entirely of independent directors, retained independent legal and financial advisors to assist it in evaluating and negotiating the transaction.

Universal Compression Holdings, headquartered in Houston, Texas, is a leading natural gas compression services company, providing a full range of contract compression, sales, operations, maintenance and fabrication services to the domestic and international natural gas industry.

Universal Compression Partners was formed by Universal Compression Holdings to provide natural gas contract compression services to customers throughout the United States. Universal Compression Holdings owns approximately 51% of Universal Compression Partners.

FCMN Contact: DOatman@universalcompression.com

CONTACT: David Oatman, Vice President, Investor Relations of Universal Compression, +1-713-335-7460

Web site: http://universalcompression.com/

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