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As Filed With the Securities and Exchange Commission on November 22, 2000
Registration No. 333-______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_________________
HANOVER COMPRESSOR COMPANY
(Exact Name of Registrant as Specified in its Charter)
Delaware 76-0625124
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
12001 North Houston Rosslyn
Houston, Texas 77086
(281) 447-8787
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
Michael J. McGhan
President and Chief Executive Officer
Hanover Compressor Company
12001 North Houston Rosslyn
Houston, Texas 77086
(281) 447-8787
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
___________________
COPY TO:
Richard S. Meller, Esq.
Latham & Watkins
233 South Wacker Drive
Suite 5800
Chicago, Illinois 60606
(312) 876-7700
___________________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box.[_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
Calculation of Registration Fee
<TABLE>
<CAPTION>
Proposed Maximum Proposed Maximum
Title of Each Class of Securities Amount to be Offering Price Per Aggregate Offering Amount of
to be Registered Registered Security Price Registration Fee
<S> <C> <C> <C> <C>
Common Stock, par value $.001 per share, of
Hanover Compressor Company.................. 2,000,000 $32.00(1) $64,000,000 $16,896(1)
</TABLE>
(1) Estimated solely for the purpose of computing the registration fee in
accordance with Rule 457(c) of the Securities Act, as amended, based upon
the average of the high and low trading prices reported in the consolidated
trading system on November 15, 2000.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
The information in this preliminary prospectus is not complete and may be
changed. These securities may not be sold until the registration statement filed
with the Securities and Exchange Commission becomes effective. This preliminary
prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any jurisdiction where the offer or sale is not
permitted.
Subject to Completion, Dated November 22, 2000
PROSPECTUS
2,000,000 Shares
Common Stock
LOGO
Hanover Compressor Company
_______________________
This prospectus relates to 2,000,000 shares of our common stock that may be
offered for sale or otherwise transferred from time to time by one or more of
the selling stockholders identified in this prospectus. See "PLAN OF
DISTRIBUTION."
The prices at which such selling stockholders may sell the shares will be
determined by the prevailing market price for the shares or in negotiated
transactions. We will not receive any proceeds from the sale of the shares. We
will bear substantially all expenses of registration of the shares, and the
selling stockholders will pay any underwriting fees, discounts or commissions,
and transfer taxes.
Our common stock is listed on the New York Stock Exchange under the symbol
"HC." On November 21, 2000, the last reported sale price of our common stock on
the New York Stock Exchange was $32 15/16 per share. Our mailing address is
12001 North Houston Rosslyn, Houston, Texas 77086, and our telephone number is
(281) 447-8787.
YOU SHOULD CAREFULLY CONSIDER MATTERS DISCUSSED UNDER THE CAPTION "RISK
FACTORS" BEGINNING ON PAGE 3.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is , 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Cautionary Statement About Forward-Looking Statements....... 2
Risk Factors................................................ 3
The Company................................................. 7
Use of Proceeds............................................. 9
Description of Hanover Capital Stock........................ 9
Selling Stockholders........................................ 11
Plan of Distribution........................................ 12
Legal Matters............................................... 14
Where You Can Find More Information......................... 14
Experts..................................................... 14
</TABLE>
__________________________
You should rely only on this prospectus. We have not, and the selling
stockholders 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, and the selling stockholders 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 as of the date on the front cover of this prospectus
only. Our business, financial condition, results of operations and prospects may
have changed since that date.
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CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS
Certain matters discussed in this prospectus 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 the context of the
statement will include words such as "believes," "anticipates," "expects,"
"estimates," or words of similar import. Similarly, statements that describe
our 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 prospectus. The risks and uncertainties include:
. 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 our compression and oil and gas
production equipment;
. new governmental safety, health, and environmental regulations which
could require us to make significant capital expenditures;
. inability to successfully integrate acquired businesses; and
. changes in economic or political conditions in the countries in which
we operate.
The forward-looking statements included herein are only made as of the date
of this prospectus and we undertake no obligation to publicly update such
forward-looking statements to reflect subsequent events or circumstances.
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RISK FACTORS
An investment in our common stock involves risks. You should carefully
consider and evaluate all of the information in this prospectus, including the
following risk factors, before investing.
Industry Conditions--A prolonged, substantial reduction in oil or gas prices
could adversely affect our business.
Our operations depend upon the levels of activity in natural gas
development, production, processing and transportation. In recent years, oil and
gas prices and the level of drilling and exploration activity have been
extremely volatile. For example, from mid-1998 to mid-1999, oil and gas
exploration and development activity and the number of well completions declined
due to a significant reduction in oil and gas prices. As a result, the demand
for our gas compression and oil and gas production equipment was adversely
affected. Any future significant prolonged decline in oil and gas prices could
have a material adverse effect on our business, results of operations, and
financial condition.
Short Lease Terms--Our compressor leases have short initial terms, and we cannot
be sure that the compressors will stay out on location after the end of the
initial lease term.
The length of our leases varies based on operating conditions and customer
needs. In most cases, under currently prevailing lease rates, the initial lease
terms are not long enough to enable us to fully recoup the average cost of
acquiring or manufacturing the compressors. We cannot assure you that a
substantial number of our lessees will continue to renew their leases or that we
will be able to re-lease the compressors to new customers or that any renewals
or re-leases will be at comparable lease rates. An inability to renew or re-
lease a substantial portion of our compressor rental fleet would have a material
adverse effect upon our business, results of operations, and financial
condition.
Substantial Capital Requirements--We require a substantial amount of capital to
expand our compressor rental fleet and our complementary businesses.
We will continue to make substantial capital investments to expand our
compressor rental fleet and our complementary businesses. We invested
approximately $374.5 million in capital expenditures during the nine months
ended September 30, 2000, and we expect to invest approximately $100 million in
capital expenditures during the remainder of 2000. The amount of these
expenditures may vary depending on the rate of return we expect to earn from
these investments, conditions in the natural gas industry, and whether we make
any significant acquisitions. Historically, we have funded these investments
through internally generated funds, debt and sale and leaseback transactions,
and equity financing. While we believe that cash flow from our operations and
borrowings under our existing $200 million bank credit facility will provide
us with sufficient cash to fund these investments, we cannot assure you that
these sources will be sufficient. Hanover Compression, Inc would need the
consent of the lenders under its bank credit facility and the lessors under its
sale and leaseback transactions to complete any new financing. Failure to
generate sufficient cash flow, together with the absence of alternative sources
of capital, could have a material adverse effect on our growth, results of
operations, and financial condition.
International Operations--There are many risks associated with conducting
operations in international markets.
We operate in many different geographic markets, some of which are outside
the United States. Changes in local economic or political conditions,
particularly in Latin America or Canada, could have a material adverse effect on
our business, results of operations, and financial condition. Additional risks
inherent in our international business activities include the following:
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. difficulties in managing international operations;
. unexpected changes in regulatory requirements;
. tariffs and other trade barriers which may restrict our ability to
enter into new markets;
. potentially adverse tax consequences;
. restrictions on repatriation of earnings;
. the burden of complying with foreign laws; and
. fluctuations in currency exchange rates and the value of the U.S.
dollar.
Acquisition Strategy--We may not be able to find suitable acquisition candidates
or successfully integrate acquired companies into our business.
As part of our business strategy, we will continue to pursue the
acquisition of other companies, assets and product lines that either complement
or expand our business. Each acquisition involves potential risks, such as the
diversion of management's attention away from current operations, problems in
integrating acquired businesses, and possible short-term adverse effects on our
operations as a result of that process. We routinely conduct preliminary
discussions with other companies that have operations or assets that may be
suitable for us to acquire. Given our selective approach to acquisitions, we are
unable to predict whether or when we will find suitable acquisition candidates
or whether we will be able to complete a material acquisition. We may seek to
finance acquisitions with cash or through the issuance of new debt and/or equity
securities. A relatively large acquisition in which cash is the primary form of
consideration would utilize a substantial portion of our existing financial
resources. As the compression industry continues to consolidate, the size of the
companies we may consider acquiring may become larger and, as a result, the
general risks inherent in acquisitions described above may become more
significant.
Competition--We operate in a highly competitive industry and compete against
many larger companies with greater financial resources.
We compete with several large national and multinational companies which
provide compression services to third parties, many of which have greater
financial and other resources than we do. If our competitors were to
substantially increase the resources they devote to the development and
marketing of competitive products and services, we cannot assure you that we
will have sufficient resources to respond accordingly.
Potential Liability and Insurance--Natural gas operations entail inherent risks
that may result in substantial liability to Hanover.
Natural gas operations entail inherent risks, including equipment defects,
malfunctions, failures, and natural disasters which could result in
uncontrollable flows of gas or well fluids, fires, and explosions. These risks
may expose us to liability for personal injury, wrongful death, property damage,
pollution, and other environmental damage. We have obtained insurance against
liability for personal injury, wrongful death, and property damage, but we
cannot assure you that the insurance will be adequate to cover our liability.
Similarly, we cannot assure you that we will be able to obtain insurance in the
future at a reasonable cost or at all. Our business, results of operations, and
financial condition could be adversely affected if we incur substantial
liability and the damages are not covered by insurance or are in excess of
policy limits.
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Governmental Regulation--Our business is subject to a variety of governmental
regulations relating to environmental, health and safety.
Our business is subject to a variety of federal, state, and local laws and
regulations relating to safety, health, and the environment. These laws and
regulations are complex, change frequently, and have tended to become more
stringent over time. Failure to comply with these laws and regulations may
result in a variety of civil and criminal enforcement measures, including
assessment of monetary penalties, imposition of remedial requirements, and
issuance of injunctions as to future compliance. As part of the regular overall
evaluation of our current operations, we are updating certain facility permits
with respect to stormwater discharges and air emissions but do not believe such
updates will have a material adverse effect on our operations as a result of any
enforcement measures or capital costs. Based on our experience to date, we
believe that the future cost of compliance with existing laws and regulations
and the future cost of necessary investigation or remediation of contamination
will not have a material adverse effect on our business, results of operations,
and financial condition. However, future events, such as discovery of unknown
contamination, any third party claims made with respect to previously owned or
leased properties, compliance with more stringent laws and regulations or more
vigorous enforcement policies by regulatory agencies or stricter or different
interpretations of existing laws and regulations could require us to make
material expenditures.
We have conducted preliminary environmental site assessments with respect
to certain properties currently owned or leased by us. Some of these assessments
have revealed that soils and/or groundwater at some of our facilities are
contaminated with hydrocarbons and various other regulated substances. We do not
believe that our operations caused any such contamination and are not currently
under any orders or directives to undertake any remedial activity. In addition,
we have previously owned or leased certain properties that had experienced soil
contamination in the past. We have since conducted remedial operations at
certain of these previously held properties as we believed necessary and either
sold the owned properties to third parties or returned the leased properties to
the lessors. We are not currently aware of any further remedial obligations at
such previously held properties. We cannot be certain, however, that we will not
be required to undertake any remedial activities involving any substantial costs
on any of these properties in the future.
Concentrated Ownership--A significant amount of our stock is owned by one
stockholder.
Our largest stockholder, GKH Partners, L.P. ("GKH"), controlled
approximately 35.5% of our voting power as of November 11, 2000. GKH is in a
position to exert substantial influence over the outcome of most corporate
actions requiring stockholder approval, including the election of directors, the
future issuance by Hanover of common stock or other securities, and the approval
of transactions involving a change of control. The interests of GKH could
conflict with the interests of our other stockholders.
Anti-Takeover Provisions--Our certificate of incorporation and by-laws contain
certain provisions that could make a takeover more difficult.
Certain provisions of our certificate of incorporation and by-laws could
make it more difficult for a third party to acquire control of Hanover, even if
such a change in control would benefit our stockholders. Our certificate of
incorporation allows us to issue preferred stock without stockholder approval
and our by-laws limit who may call special stockholder meetings. These
provisions could make it more difficult for a third party to acquire us and may
discourage acquisition bids or limit the price that investors might be willing
to pay in the future for shares of our common stock. The ownership of a
substantial number of our shares of common stock by GKH and our officers,
directors, employees and their affiliates also could discourage acquisition
bids. There are also provisions of Delaware law that could delay or complicate a
merger, tender offer, or proxy contest. Please read the "Description of Hanover
Capital Stock" section of this prospectus.
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Shares Eligible for Future Sale--The market price of our common stock could be
depressed by future sales.
Future sales of our common stock, or the perception that these sales could
occur, could adversely affect the market price of our common stock. We cannot
assure you as to when and how many of the shares of our common stock will be
sold and the effect those sales may have on the market price of our common
stock. In addition, we may issue additional shares of common stock in connection
with future acquisitions or other transactions. This year we completed
the acquisition of Applied Process Solutions, Inc. in an all stock transaction
for an aggregate of 2,300,000 shares of common stock. We also recently
acquired the Dresser Rand compression services division from Ingersoll-Rand
Company for an aggregate of approximately 2,920,000 shares of our common stock.
In addition, we recently entered into an agreement to acquire OEC Compression
Corporation in an all stock transaction. The actual number of shares of our
common stock that will be issued pursuant to the OEC agreement will not be
determined until that transaction is consummated; however, the maximum number of
shares that may be issued is 1,229,511 and the minimum number of shares that may
be issued is 1,134,933. Although some of these recently issued or to-be-issued
securities are or will be subject to regulatory or contractual resale
restrictions, as these restrictions lapse or if these shares are registered for
sale to the public, they may be sold to the public. In the event a substantial
number of shares of our common stock become available for unrestricted resale,
there could be a material adverse effect on the prevailing market price for our
common stock.
Payment of Dividends--We may not be able to pay dividends on our common stock.
We have no obligation to pay dividends on our common stock. The declaration
and payment of dividends on our common stock is subject to and will depend upon,
among other things:
. our future earnings and financial condition, liquidity, and capital
requirements;
. our ability and the ability of Hanover Compression, Inc., or HCI, to
pay dividends under HCI's bank credit agreement;
. the general economic and regulatory climate; and
. other factors deemed relevant by our board of directors.
Our guarantee of HCI's senior debt restricts our ability to pay cash
dividends on our common stock.
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THE COMPANY
The information provided in this prospectus gives effect to a restructuring
of Hanover Compressor Company that was effected on December 9, 1999 (the
"Restructuring"). The sole purpose of the Restructuring was to create a
holding company, and the Restructuring has had and will have no effect on our
business. As a result of the Restructuring, "old" Hanover Compressor Company
was renamed Hanover Compression Inc. ("HCI") and became a wholly-owned
subsidiary of a newly created holding company called Hanover Compressor Company.
Each share of HCI was exchanged for one share of "new" Hanover Compressor
Company, which replaced "old" Hanover Compressor Company as the publicly held
company whose stock is traded on the New York Stock Exchange. Financial and
other information discussed in this prospectus for periods prior to the
Restructuring relates to HCI and its subsidiaries. Except as described in the
previous sentence 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. The information provided in
this prospectus also gives effect to the two-for-one split of Hanover's common
stock effective June 13, 2000.
We are a leading provider of a broad array of natural gas compression
services in the United States and select international markets. 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 customers include independent
and major producers and distributors of natural gas throughout the Western
Hemisphere. Our products and services are essential to the production,
transportation, processing, and storage of natural gas. Founded in 1990 and
publicly held since 1997, we are the largest public company whose primary focus
is in the natural gas compression business. Our compression services are
complemented by our compressor and oil and gas production equipment fabrication
operations, which broaden our customer relationships both domestically and
internationally.
Through internal growth and a series of strategic acquisitions, we have
become the largest operator of rental compression horsepower capacity in the
United States, serving an estimated 28% of the domestic rental market. 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 September 30, 2000, our compression rental fleet included the following:
Units Horsepower
----- ----------
U.S............................................. 4,379 1,714,000
International................................... 426 384,000
----- ---------
Total Fleet..................................... 4,805 2,098,000
===== =========
In addition to our business of providing natural gas compression services,
we also fabricate gas compressors for sale to third parties and for inclusion in
our rental fleet. We were the second largest fabricator of natural gas
compressors (by horsepower) in North America in 1999.
Complementing our gas compression businesses is our oil and gas production
equipment fabrication business. Oil and gas production equipment is typically
installed at the wellhead immediately before beginning large-scale production
and remains at the site for the life of the well. We fabricate equipment used
by oil and gas producers to separate and treat oil and gas immediately after it
is produced in order to facilitate further processing, transportation and sale.
Industry Overview
We compete primarily in the transportable natural gas compression market
for units of up to 4,400 horsepower. We believe that aggregate domestic natural
gas compression horsepower grew from approximately 8.8 million horsepower at the
end of 1992 to approximately 14.9 million horsepower at the end of 1999,
reflecting a compound annual growth rate of 8%. We believe that the domestic gas
compression market will continue to grow due to increasing consumption of
natural gas, continued aging of the natural gas reserve base and the attendant
decline of wellhead pressures, and the discovery of new reserves.
We believe that the rental portion of the domestic gas compression market
grew from approximately 1.8 million horsepower at the end of 1992 to
approximately 4.7 million horsepower at the end of 1999, reflecting a compound
annual growth rate of 15%. We believe that the growth in rental compression
capacity in the U.S. has been driven primarily by an increasing trend toward
outsourcing by energy producers and processors. Internationally, we believe that
similar growth opportunities for compressor rental and sales exist due to
anticipated increases in energy consumption worldwide, new international
environmental and conservation laws and increased outsourcing by energy
producers and processors. As worldwide gas consumption continues to grow, we
believe that there will also be a continued demand for the purchase and sale of
gas compression units.
The oil and gas production equipment industry is more sensitive than the
gas compression industry to the volatility of oil and natural gas prices,
indicating that the growth of this industry will more closely track the growth
of oil and gas production.
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Growth Strategy
Our business strategy is to continue building on our reputation as the
premier operating company in natural gas compression and to grow the rental
fleet in accordance with a proven growth strategy. Our aggressive growth
strategy has generated the following results:
. aggregate horsepower capacity of our compressor rental fleet grew from
117,000 horsepower in 1992 to 2,098,000 horsepower at September 30,
2000;
. we maintained average horsepower utilization of approximately 92% from
1994 to 1999, compared to the average industry utilization which we
estimate to be approximately 83%;
. revenues increased from $33.1 million in 1992 to $317.0 million in
1999;
. earnings before interest, leasing expense, taxes, and depreciation and
amortization ("EBITDA") increased from $7.3 million in 1992 to
$132.1 million in 1999; and
. net income grew from $1.0 million in 1992 to $40.4 million in 1999.
We intend to build on our results to date by continuing to pursue our
growth strategy, which includes the following key elements:
. delivering a comprehensive range of compression products and services;
. focusing on higher horsepower compression units;
. expanding our international operations;
. broadening our customer base by acquiring compressors from, and
leasing them back to, our customers;
. participating in the consolidation of the compression industry;
. acquiring other companies having assets or businesses which complement
ours;
. capitalizing on our decentralized management and operating structure
to provide superior customer service; and
. using equity incentives to attract and retain an experienced,
entrepreneurial, highly motivated management team.
We believe the successful execution of our growth strategy, combined with
our focus on and leadership position in the compression industry, will enable us
to continue to generate and realize significant growth opportunities.
Our principal executive office is located at 12001 North Houston Rosslyn,
Houston, Texas 77086, telephone (281) 447-8787.
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USE OF PROCEEDS
The selling stockholders will receive all of the proceeds from the sale of
the common stock offered by this prospectus. We will not receive any of the
proceeds from the sale of the common stock offered by this prospectus.
DESCRIPTION OF HANOVER CAPITAL STOCK
Our authorized capital stock currently consists of 200,000,000 shares of
common stock and 3,000,000 shares of preferred stock, $.001 par value per share.
The following summary description relating to the capital stock does not purport
to be complete. For a detailed description, reference is made to our
certificate of incorporation.
Common Stock
As of November 11, 2000, 66,331,797 shares of common stock were issued and
held of record by approximately 294 stockholders. The holders of common stock
are entitled to one vote for each share held of record on all matters submitted
to a vote of the stockholders. Subject to preferential rights with respect to
our preferred stock, holders of common stock are entitled to receive ratably any
dividends declared by our board of directors out of legally available funds. On
liquidation, dissolution, sale, or winding up of Hanover, holders of common
stock are entitled to share ratably in all assets remaining after payment of
liabilities and satisfaction of preferential rights. Holders of common stock
have no preemptive or subscription rights. The outstanding shares of common
stock are, and the shares of common stock to be issued upon conversion of the
preferred securities will be, fully paid and nonassessable. We have never
declared a dividend on the common stock, and our bank credit agreement prohibits
the payment of dividends on common stock without the lenders' prior written
consent. The payment of any such dividends also will be subject to and may be
limited by the terms of any preferred stock we may issue in the future.
Transfer Agent And Registrar
The transfer agent and registrar for the common stock is ChaseMellon
Shareholder Services.
Preferred Stock
We are authorized to issue 3,000,000 shares of preferred stock. Our board
of directors may establish, without stockholder approval, one or more classes or
series of preferred stock having the number of shares, designations, relative
voting rights, dividend rates, liquidation, and other rights, preferences, and
limitations that the board of directors may designate. We believe that this
power to issue preferred stock provides flexibility in connection with possible
corporate transactions. The issuance of preferred stock, however, could
adversely affect the voting power of holders of common stock and restrict their
rights to receive payments upon liquidation of Hanover. It could also have the
effect of delaying, deferring or preventing a change in control of Hanover.
Mandatorily Redeemable Convertible Preferred Securities
In December 1999, we issued $86,250,000 of unsecured 7 1/4% Mandatorily
Redeemable Convertible Preferred Securities through Hanover Compressor Capital
Trust, a Delaware business trust and subsidiary of Hanover. The Convertible
Preferred Securities have a liquidation amount of $50 per unit. The Convertible
Preferred Securities mature in 30 years but we may redeem them partially or in
total any time on or after December 20, 2002. The Convertible Preferred
Securities provide for annual cash distributions at the rate of 7 1/4%, payable
quarterly in arrears; however, payments may be deferred for up to 20
consecutive quarters subject to certain restrictions. During any periods in
which payments are deferred, in general, Hanover cannot pay any dividend or
distribution on our capital stock or redeem, purchase, acquire, or make any
liquidation on any of our capital stock. Each Convertible Preferred Security is
convertible into 2.7972 shares of Hanover common stock, subject to adjustment
for certain events.
Special Provisions Of The Certificate Of Incorporation And Delaware Law
Section 102(b)(7) of the Delaware General Corporation Law authorizes
corporations to limit or eliminate the personal liability of directors to
corporations and their stockholders for monetary damages for breach of
directors' fiduciary duty of care. Although Section 102(b) does not change
directors' duty of care, it enables corporations to limit available relief to
equitable remedies such as injunction or rescission. Our certificate of
incorporation limits the liability of directors (in their capacity as directors
but not in their capacity as officers) to us or our stockholders to the fullest
extent permitted by Section 102(b). Specifically, our directors will not be
personally liable for monetary damages for breach of a director's fiduciary duty
as a director, except for liability for(a) any breach of the director's duty of
loyalty to Hanover or our stockholders (b) acts or omissions not in good faith
or which involve
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intentional misconduct or a knowing violation of law, (c) unlawful payments of
dividends or unlawful stock repurchases or redemptions as provided in Section
174 of the Delaware General Corporation Law or (d) any transaction from which
the director derived an improper personal benefit.
To the maximum extent permitted by law, our certificate of incorporation
and bylaws provide for mandatory indemnification of directors and officers and
permit indemnification of our officers, employees, and agents against all
expense, liability, and loss to which they may become subject or which they may
incur as a result of being or having been a director, officer, employee, or
agent of Hanover or its subsidiaries. In addition, we must advance or reimburse
directors and may advance or reimburse officers, employees, and agents for
expenses incurred by them in connection with indemnifiable claims.
We are subject to the provisions of Section 203 of the Delaware General
Corporation Law. In general, Section 203 prohibits a public Delaware
corporation from engaging in a "business combination" with an "interested
stockholder" for a period of three years after the date of the transaction in
which the person became an interested stockholder, unless (a) before that person
became an interested stockholder, the corporation's board of directors approved
the transaction in which the interested stockholder became an interested
stockholder or approved the business combination; (b) upon completion of the
transaction that resulted in the interested stockholder's becoming an interested
stockholder, the interested stockholder owns at least 85% of the voting stock
outstanding at the time the transaction commenced (excluding stock held by
directors who are also officers of the corporation and by employee stock plans
that do not provide employees with the right to determine confidentially whether
shares held subject to the plan will be tendered in a tender or exchange offer);
or (c) following the transaction in which that person became an interested
stockholder, the business combination is approved by the corporation's board of
directors and authorized at a meeting of stockholders by the affirmative vote of
the holders of at least two-thirds of the outstanding voting stock not owned by
the interested stockholder. Under Section 203, these restrictions also do not
apply to certain business combinations proposed by an interested stockholder
following the announcement or notification of one of certain extraordinary
transactions involving the corporation and a person who was not an interested
stockholder during the previous three years or who became an interested
stockholder with the approval of a majority of the corporation's directors, if
that extraordinary transaction is approved or not opposed by a majority of the
directors who were directors before any person became an interested stockholder
in the previous three years or who were recommended for election or elected to
succeed such directors by a majority of such directors then in office.
"Business combination" includes mergers, assets sales, and other transactions
resulting in a financial benefit to the stockholder. "Interested stockholder"
is a person who, together with affiliates and associates, owns (or, within three
years, did own) 15% or more of the corporation's voting stock.
10
<PAGE>
SELLING STOCKHOLDERS
We originally issued and sold the common stock to Janus Aspen Series on
behalf of its series Janus Aspen Aggressive Growth Fund and Janus Investment
Fund on behalf of its series Janus Enterprise Fund in a transaction exempt from
the registration requirements of the Securities Act. The stockholders named
below and their transferees, pledgees, donees or successors (collectively, the
"selling stockholders") may from time to time offer and sell pursuant to this
prospectus any or all of the common stock.
The following table sets forth, with respect to each of the selling
stockholders (i) the number of shares of common stock owned as of November 11,
2000 and prior to the offering contemplated hereby, (ii) the maximum number of
shares of common stock which may be sold in this offering, and (iii) the number
of shares of common stock which will be owned after the offering, assuming the
sale of all the shares of common stock offered hereby:
<TABLE>
<CAPTION>
Number of Shares Number of Shares of
---------------- -------------------
of Common Stock Number of Shares of Common Stock to be
--------------- ------------------- ------------------
Selling Holder Owned Prior to Common Stock Owned After the
-------------- -------------- ------------ ---------------
the Offering Offered Hereby Offering
------------ -------------- --------
<S> <C> <C> <C>
Janus Aspen Series on behalf of its series Janus
Aspen Aggressive Growth Fund....................... 896,250 896,250 --
Janus Investment Fund on behalf of its series
Janus Enterprise Fund.............................. 1,103,750 1,103,750 --
Total.............................................. 2,000,000 2,000,000 --
</TABLE>
None of the selling stockholders has or has had, within the past three
years, any position, office, or other material relationship with Hanover or any
of their respective predecessors or affiliates.
Because the selling stockholders may, pursuant to this prospectus, offer
all or some portion of the common stock they presently hold, no estimate can be
given as to the shares of common stock that will be held by the selling
stockholders upon termination of any such sales. In addition, the selling
stockholders identified above may have sold, transferred, or otherwise disposed
of all or a portion of their common stock since the date on which they provided
the information regarding their preferred securities or common stock in a
transaction exempt from the registration requirements of the Securities Act.
Only selling stockholders identified above who beneficially own the common
stock set forth opposite each such selling stockholder's name in the foregoing
table on the effective date of the registration statement of which this
prospectus forms a part may sell common stock pursuant to the registration
statement. We may from time to time include additional selling stockholders in
supplements to this prospectus.
11
<PAGE>
We will pay the expenses of registering the common stock being sold
hereunder.
PLAN OF DISTRIBUTION
The purpose of this prospectus is to permit the selling stockholders to
offer for sale or to sell shares of common stock at such time and at such prices
as they, in their sole discretion, choose. We will not receive any of the
proceeds from these offerings or sales.
The selling stockholders may sell or distribute some or all of their shares
from time to time through dealers or brokers or other agents or directly to one
or more purchasers in transactions (which may involve crosses and block
transactions) on the New York Stock Exchange or other exchanges on which our
common stock may be listed for trading, in privately negotiated transactions
(including sales pursuant to pledges) or in the over-the-counter market, or in
brokerage transactions, or in a combination of these transactions. Such
transactions may be effected by the selling stockholders at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices, at negotiated prices, or at fixed prices, which may be changed.
Brokers, dealers, or their agents participating in such transactions as agent
may receive compensation in the form of discounts, concessions or commissions
from the selling stockholders (and, if they act as agent for the purchaser of
the shares, from the purchaser). Such discounts, concessions or commissions as
to a particular broker, dealer or other agent might be in excess of those
customary in the type of transaction involved.
The selling stockholders and any such brokers, dealers or other agents that
participate in such distribution may be deemed to be "underwriters" within the
meaning of the Securities Act, and any discounts, commissions or concessions
received by any such brokers, dealers or other agents might be deemed to be
underwriting discounts and commissions under the Securities Act.
In connection with the offer and sale of the shares of common stock by the
selling stockholders, various state securities laws and regulations require that
any such offer and sale should be made only through the use of a broker-dealer
registered as such in any state where a selling stockholder engages such broker-
dealer and in any state where such broker-dealer intends to offer and sell
shares.
Under applicable rules and regulations under the Exchange Act, any person
engaged in a distribution of the shares of common stock offered hereby may not
simultaneously engage in market activities with respect to common stock for the
applicable period under Regulation M prior to the commencement of such
distribution. In addition, the selling stockholders will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including Rule 10B-5 and Regulation M, which provisions may limit
the timing of purchases and sale of any of the shares by the selling
stockholders. All of the foregoing may affect the marketability of the shares
offered hereby.
Pursuant to the purchase agreement, we will pay all expenses of the
registration of the offered securities, including Commission filing fees and
expenses of compliance with state securities or "blue sky" laws. The selling
stockholders will pay any underwriting discounts and selling commissions. The
selling stockholders will be indemnified by us against certain civil
liabilities, including certain liabilities under the Securities Act, or they
will be entitled to contribution in connection therewith. The selling
stockholders will severally indemnify us against certain civil liabilities,
including certain liabilities under the Securities Act, or will be entitled to
contribution in connection therewith.
Pursuant to the purchase agreement, we are required to use our best efforts
to keep the registration statement continuously effective for a period of two
years from its effective date or a shorter period that will terminate upon
the earlier of the date on which the offered securities shall have been sold
pursuant to the Registration Statement or the date on which the offered
Securities are permitted to be freely sold or distributed to the public pursuant
to any exemption from the registration requirements of the Securities Act
(including in reliance on Rule 144(k) but excluding in reliance on Rule 144A
under the Securities Act). Notwithstanding these obligations, we
12
<PAGE>
may, under certain circumstances, postpone or suspend the filing or the
effectiveness of the registration statement (or any amendments or supplements
thereto) or the sale of offered securities under the registration statement.
13
<PAGE>
LEGAL MATTERS
The validity of the common stock will be passed upon by Latham & Watkins,
Chicago, Illinois.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly, and special reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at the SEC's web site at http://www.sec.gov. These filings include
previous filings made by our predecessor, which was also called "Hanover
Compressor Company." You may also read and copy any document we file at the
SEC's public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the regional offices of the SEC located at 7 World Trade Center, Suite
1300, New York, New York 10048 and at 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. You may obtain information on the operation of the
SEC's public reference room in Washington, D.C. by calling the SEC at
1-800-SEC-0330. We also file information with The New York Stock Exchange. These
reports, proxy statements and other information may be read and copied at 20
Broad Street, New York, New York 10005.
This prospectus, which constitutes a part of a registration statement on
Form S-3 that we filed with the Commission under the Securities Act of 1933,
omits certain information contained in the registration statement. Accordingly,
you should refer to the registration statement and its exhibits for further
information with respect to Hanover Compressor Company and the shares of common
stock offered hereby. Furthermore, statements contained in this prospectus or in
any document incorporated in this prospectus by reference regarding any contract
or other document are not necessarily complete, and, in each instance, you
should refer to the copy of the contract or other document filed with the
Commission as an exhibit to the registration statement.
In this prospectus we have incorporated by reference certain reports and
other information we and our predecessor have filed, or will file, with the SEC.
The information incorporated by reference is an important part of this
prospectus, and information that we file later with the SEC will automatically
update and supersede this information. We incorporate by reference the documents
listed below and any further filings made with the SEC under Sections 13(a),
13(c), 14, or 15(d) of the Exchange Act until all of the securities are sold or
this offering is terminated:
. our Annual Report on Form 10-K for the year ended December 31, 1999;
. our Quarterly Reports on Form 10-Q for the fiscal quarters ended March
31, 2000; June 30, 2000; and September 30, 2000; and
. our Current Reports on Form 8-K dated May 5, 2000; May 23, 2000; June
7, 2000; July 13, 2000; July 19, 2000; September 14, 2000;
November 9, 2000; November 13, 2000; and November 22, 2000.
You may request a copy of these filings at no cost, by writing or
telephoning us at the following address:
Hanover Compressor Company
12001 North Houston Rosslyn
Houston, Texas 77086
Attention: Corporate Secretary
Telephone: (281) 447-8787
EXPERTS
The financial statements incorporated in this prospectus by reference to
the Annual Report on Form 10-K of Hanover Compressor Company for the year ended
December 31, 1999 and the audited historical financial statements of the
Dresser-Rand Compression Services Rental and Packaging Division included under
Item 7(a) of Hanover Compressor Company's Current Report on Form 8-K/A dated
November 13, 2000 have been so incorporated in reliance on the reports of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
14
<PAGE>
2,000,000 SHARES
HANOVER COMPRESSOR COMPANY
COMMON STOCK
--------------------
PROSPECTUS
--------------------
, 2000
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the estimated expenses in connection with
the distribution of the securities covered by this Registration Statement. All
of the expenses will be borne by the Company except as otherwise indicated.
Registration fee........................................... $16,896
Fees and expenses of accountants........................... 10,000
Fees and expenses of legal counsel......................... 25,000
Printing and engraving expenses............................ 20,000
Miscellaneous.............................................. 2,000
-------
Total...................................................... $73,896
Item 15. Indemnification of Directors and Officers.
The Company is empowered by Section 145 of the Delaware General Corporation
Law (the "DGCL"), subject to the procedures and limitations stated therein, to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending, or completed action, suit, or proceeding by reason
of the fact that such person is or was a director, officer, employee, or agent
of the company, or is or was serving at the request of the company as a
director, officer, employee, or agent of another corporation or other
enterprise, against reasonable expenses (including attorneys' fees), judgments,
fines, and amounts paid in settlement actually incurred by him in connection
with such action, suit, or proceeding, if such director, officer, employee, or
agent acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the company and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful. The Company is required by Section 145 to indemnify any person
against reasonable expenses (including attorneys' fees) actually incurred by him
in connection with an action, suit, or proceeding in which he is a party because
he is or was a director, officer, employee, or agent of the company or is or was
serving at the request of the company as a director, officer, employee, or agent
of another corporation or other enterprise, if he has been successful, on the
merits or otherwise, in the defense of the action, suit, or proceeding. Section
145 also allows a corporation to purchase and maintain insurance on behalf of
any such person against any liability asserted against him in any such capacity,
or arising out of his status as such, whether or not the corporation would have
the power to indemnify him against such liability under the provisions of
Section 145. In addition, Section 145 provides that indemnification pursuant to
its provisions is not exclusive of other rights of indemnification to which a
person may be entitled under any bylaw, agreement, vote of shareholders or
disinterested directors, or otherwise.
Article Eighth of the Company's charter provides that the Company shall
indemnify and hold harmless all officers and directors of the Company and
advance expenses reasonably incurred by such officers and directors in defending
any civil, criminal, administrative, or investigative action, suit, or
proceeding, in accordance with and to the fullest extent permitted by Section
145 of the DGCL.
Item 16. Exhibits.
The following documents are filed as exhibits to this Registration
Statement, including those exhibits incorporated herein by reference to a prior
filing of the Company under the Securities Act or the Exchange Act as indicated
in parenthesis:
II-1
<PAGE>
Exhibit No. Description
---------- ----------------------------------------------------------------
4.1 Certificate of Incorporation of Hanover Compressor Holding Co.
(incorporated by reference to Exhibit 3.1 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1999).
4.2 Certificate of Amendment to Certificate of Incorporation of
Hanover Compressor Holding Co. dated December 9, 1999
(incorporated by reference to Exhibit 3.2 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1999).
4.3 Bylaws of Hanover Compressor Company (incorporated by reference
to Exhibit No. 3.3 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1999).
4.4 Form of Hanover Compressor Company Common Stock certificate
(incorporated by reference to Exhibit 4.11 to the Company's
Registration Statement on Form S-1 (File No. 333-27953), as
amended).
5.1 Opinion of Latham & Watkins as to the validity of the common
stock.
23.1 Consent of PricewaterhouseCoopers LLP, independent accountants.
23.2 Consent of PricewaterhouseCoopers LLP, independent accountants.
23.3 Consent of Latham & Watkins (included in the opinion filed as
Exhibits 5.1).
24.1 Powers of Attorney (included on the signature page of this
Registration Statement).
99.1 Purchase Agreement, dated as of May 19, 2000, by and among
Hanover Compressor Company and Janus Aspen Series on behalf of
its series Janus Aspen Aggressive Growth Fund.
99.2 Purchase Agreement, dated as of May 19, 2000, by and among
Hanover Compressor Company and Janus Investment Fund on behalf of
its series Janus Enterprise Fund.
99.3 Purchase Agreement, dated as of July 11, 2000, as amended August
31, 2000, among Hanover Compressor Company, Hanover Compression
Inc., Dresser-Rand Company and Ingersoll-Rand Company
(incorporated by reference to Exhibit 99.2 to the Company's
current report on Form 8-K dated September 14, 2000 (File
No. 001-13071)).
Item 17. Undertakings
(a) The registrants hereby undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
II-2
<PAGE>
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement; notwithstanding the foregoing, any
increase or decrease in the volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement; provided, however, that the undertakings set
forth in clauses (i) and (ii) above do not apply if the information
required to be included in a post-effective amendment by those clauses
is contained in periodic reports filed with or furnished to the
Securities and Exchange Commission by the Company pursuant to Section
13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of the Company's annual
report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act
of 1934 (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers, and controlling
persons of the registrants pursuant to the provisions set forth in Item 15 or
otherwise, the registrants have been advised that, in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by a registrant of expenses incurred or paid by a director, officer, or
controlling person of the registrant in the successful defense of any action,
suit, or proceeding) is asserted by such director, officer, or controlling
person in connection with the securities being registered, the registrant will,
unless, in the opinion of its counsel, the matter has been settled by
controlling precedent, submit the question of whether such indemnification is
against public policy as expressed in the Act to a court of appropriate
jurisdiction and will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Hanover Compressor Company certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Houston, State of Texas, on
November 22, 2000.
HANOVER COMPRESSOR COMPANY
By: /s/ MICHAEL J. MCGHAN
__________________________________________
MICHAEL J. MCGHAN
PRESIDENT AND CHIEF EXECUTIVE OFFICER
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Michael J. McGhan and William S. Goldberg or
either of them, his true and lawful attorney-in-fact and agent, with full power
of substitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement and to file the same with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and ratifying
and confirming all that said attorney-in-fact and agent or his substitute or
substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities indicated on the 22nd day of November, 2000.
<TABLE>
<CAPTION>
Signatures Title
-------------------------- -------------------
<S> <C>
/s/ Michael J. McGhan President and Chief Executive Officer (Principal
_______________________________ Executive Officer and Director)
Michael J. McGhan
/s/ William S. Goldberg Chief Financial Officer and Director (Principal
______________________________ Financial and Accounting Officer)
William S. Goldberg
/s/ Ted Collins, Jr. Director
______________________________
Ted Collins, Jr.
/s/ Robert R. Furgason Director
______________________________
Robert R. Furgason
</TABLE>
II-4
<PAGE>
Signatures Title
--------------------- ----------------------
/s/ Melvyn N. Klein Director
______________________________
Melvyn N. Klein
/s/ Michael A. O'Connor Director
______________________________
Michael A. O'Connor
/s/ Alvin V. Shoemaker Director
______________________________
Alvin V. Shoemaker
II-5
