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$170,000,000
[LOGO]
HANOVER COMPRESSOR COMPANY
4.75% Convertible Senior Notes due March 15, 2008
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You may convert the convertible notes into shares of common stock of
Hanover Compressor Company at any time prior to their maturity or their
redemption by us. The conversion rate is 22.7596 shares per each $1,000
principal amount of convertible notes, subject to adjustment in certain
circumstances. This is equivalent to a conversion price of approximately
$43.94 per share. On March 15, 2001, the last reported sale price for the
common stock on the New York Stock Exchange was $35.26 per share. The common
stock is listed under the symbol "HC".
We will pay interest on the convertible notes on March 15 and September 15
of each year. The first such payment will be made on September 15, 2001. The
convertible notes are equal in right of payment to all of our senior
indebtedness. The convertible notes will be issued only in denominations of
$1,000 and integral multiples of $1,000.
On or after March 15, 2004, we have the option to redeem all or a portion
of the convertible notes which have not been previously converted, at the
redemption prices set forth in the prospectus. You have the option, subject to
certain conditions, to require us to repurchase any convertible note held by
you in the event of a change in control, as described in the prospectus, at a
price equal to 100% of its principal amount plus accrued interest to the date
of repurchase.
Concurrent with this offering of convertible notes, we and certain selling
stockholders are offering 10,000,000 shares of common stock. Neither offering
is contingent on the other.
See "Risk Factors" beginning on page 14 to read about factors you should
consider before buying the convertible notes.
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Neither the Securities and Exchange Commission nor any other regulatory
body has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is
a criminal offense.
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{TABLE}
{CAPTION}
Per Note Total
-------- -----
{S} {C} {C}
Initial public offering price............................ 100.0% $170,000,000
Underwriting discount.................................... 3.0% $ 5,100,000
Proceeds, before expenses, to Hanover.................... 97.0% $164,900,000
{/TABLE}
The initial public offering price set forth above does not include accrued
interest, if any. Interest on the convertible notes will accrue from the date
of original issuance of the notes, expected to be March 21, 2001.
To the extent that the underwriters sell more than $170,000,000 principal
amount of convertible notes, the underwriters have the option to purchase up
to an additional $22,000,000 principal amount of convertible notes at the
initial public offering price less the underwriting discount.
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The underwriters expect to deliver the convertible notes in book-entry
form only through the facilities of The Depository Trust Company against
payment in New York, New York on March 21, 2001.
Goldman, Sachs & Co. Salomon Smith Barney
Credit Suisse First Boston JPMorgan
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Prospectus dated March 15, 2001.
{PAGE}
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You should rely only on this prospectus. We have not authorized any other
person to provide you with different information. If anyone provides you with
different or inconsistent information, you should not rely on it. We are not
making an offer to sell these securities in any jurisdiction where the offer of
sale is not permitted. You should assume that the information appearing in this
prospectus is accurate only as of the date on the front cover of this
prospectus. Our business, financial condition, results of operations and
prospects may have changed since that date.
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2
{PAGE}
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this prospectus.
You should read this entire prospectus carefully. The information provided in
this prospectus gives effect to a two-phase restructuring of Hanover Compressor
Company (the "Restructuring") completed in 1999 and 2000. The sole purpose of
the Restructuring was to create a holding company, and the Restructuring has
had no effect on our business. Pursuant to the Restructuring, substantially all
of our assets and operations are now at a subsidiary level. Share numbers and
per share amounts reflect a 2-for-1 split of our common stock effected in June
2000. Except as described in this paragraph and unless the context requires
otherwise, "Hanover," "we," "us," "our" or similar terms in this prospectus
refer to "new" Hanover Compressor Company and its subsidiaries following
completion of the Restructuring.
The Company
We are a leading provider of a broad array of natural gas compression, gas
handling and related services in the United States and select international
markets. Founded in 1990 and publicly held since 1997, we operate the largest
compressor rental fleet, in terms of horsepower, in the gas compression
industry and provide our services on a rental, contract compression,
maintenance and acquisition leaseback basis. Our maintenance business supplies
parts and services to customers that own their own compression equipment but
want to outsource their compression operations. Our compression services are
complemented by our compressor and oil and gas production equipment fabrication
operations and gas processing, gas treatment, gas measurement and power
generation services, which broaden our customer relationships both domestically
and internationally. Our products and services are essential to the production,
gathering, processing, transportation and storage of natural gas and are
provided primarily to independent and major producers and distributors of
natural gas.
As of December 31, 2000, we had a fleet of 4,840 compression rental units
with an aggregate capacity of 2,151,000 horsepower, up from 117,000 horsepower
in 1992, which represents a 44% compound annual growth rate ("CAGR"). From 1992
through 1999, revenues have grown from $33.1 million to $317.0 million, or a
CAGR of 38%; earnings before interest, leasing expense, taxes, distributions on
mandatorily redeemable convertible preferred securities, and depreciation and
amortization ("EBITDA") have grown from $7.3 million to $132.1 million, or a
CAGR of 51%; net income has grown from $1 million to $40.4 million, or a CAGR
of 70%; and earnings per share have grown from $0.06 to $0.66, or a CAGR of
35%. From the nine months ended September 30, 1999 to the nine months ended
September 30, 2000, revenues grew from $227.8 million to $370.2 million, or by
63%; EBITDA grew from $94.8 million to $139.4 million, or by 47%; net income
grew from $27.5 million to $39.3 million, or by 43%; and earnings per share
grew from $0.45 to $0.61, or by 35%. Further, we have maintained average
horsepower utilization of approximately 93% from 1994 to 2000, compared to
industry rates that we believe have been 80% to 85% for this period.
Through internal growth and a series of strategic acquisitions, we have
become the largest operator of rental compression horsepower capacity in the
United States. We began international operations in 1995 and have become one of
the largest providers of compression services in the rapidly growing Latin
American and Canadian markets. As of December 31, 2000, our compression rental
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