909413--2/28/2007--HANOVER_COMPRESSOR_CO

related topics

{investment, property, distribution}

{debt, indebtedness, cash}

{operation, international, foreign}

{customer, product, revenue}

{cost, regulation, environmental}

{regulation, change, law}

{condition, economic, financial}

{competitive, industry, competition}

{personnel, key, retain}

{acquisition, growth, future}

{gas, price, oil}

{financial, litigation, operation}

The documents governing our outstanding debt, including our compression equipment lease obligations, contain financial and other restrictive covenants. Failing to comply with those covenants could result in an event of default which, if not cured or waived, could have a material adverse effect on us. We have significant leverage relative to our total capitalization, which could result in a downgrade in our credit rating or other adverse consequences if we do not reduce our leverage. Our ability to substitute compression equipment under our compression equipment leases is limited and there are risks associated with reaching that limit prior to the expiration of the lease term. A prolonged, substantial reduction in oil or gas prices, or prolonged instability in U.S. or global energy markets, could adversely affect our business. There are many risks associated with conducting operations in international markets. Local unrest and violence in Nigeria has adversely affected our financial results and could result in possible impairment and write-downs of our assets in Nigeria if the political situation in Nigeria does not improve. Further changes to the laws and regulations of Venezuela could adversely impact our results of operations and require us to write-down our investments in Venezuela. Fluctuations in currency exchange rates in international jurisdictions could adversely affect our business. Our proposed merger with Universal is subject to the receipt of consents and approvals from various government entities that may impose conditions on, jeopardize or delay completion of the mergers or reduce the anticipated benefits of the merger. While the merger is pending, we will be subject to business uncertainties and contractual restrictions that could adversely affect our business. Failure to complete the merger could negatively impact our stock price and our future business and financial results because of, among other things, the disruption that would occur as a result of uncertainties relating to a failure to complete the merger. The merger agreement limits our ability to pursue an alternative acquisition proposal and may require us to pay a termination fee of up to $70 million if we do. Many of our compressor leases with customers have short initial terms, and we cannot be sure that the leases for these rental compressors will be renewed after the end of the initial lease term. We operate in a highly competitive industry. Natural gas operations entail inherent risks that may result in substantial liability to us. Our ability to manage our business effectively will be weakened if we are unable to attract and retain qualified personnel. Our business is subject to a variety of governmental regulations.

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909413--2/28/2007--HANOVER_COMPRESSOR_CO_/