Universal Compression has handed mandates to four banks to lead $852 million in structured facilities to back the company's acquisition of Weatherford Global Gas Compression. First Union, Deutsche Bank, Bank of Nova Scotia and BANK ONE were tapped based on the structures they pitched to the company, bankers said. ABN-Amro, seen as a top candidate for a lead role in the early going, did not make the cut. An ABN official declined to comment on the selection process or whether the bank would participate in the deal at another level.Richard Fitzgerald, senior v.p. and cfo in Houston, did not return repeated calls.
A banker on the deal explained that Universal originally wanted to execute a large synthetic lease transaction in the neighborhood of $600 million. "[That way] they could have had a significant portion of the debt off-balance sheet, but the problem was market capacity," he said. "Deutsche Bank did a $200 million synthetic lease last year and they had trouble syndicating it. We thought there wasn't enough market capacity for a $600 million synthetic lease deal."
Instead, the banks arranged a three-part financing. Deustche Bank and First Union have co-underwritten a $427 million, high-yield-backed synthetic lease. Eighty-five percent of the bond-backed lease will be funded through the bond market, the banker explained, with the remaining "B" and "C" notes going out to a club of banks. First Union also arranged a $300 million asset-backed synthetic lease and underwrote a $125 million revolver. He declined to reveal the current status of the credit. It could not be verified before press time what roles Scotia and BANK ONE had in each of the financings.
Officials at Deutsche Bank, Scotia and BANK ONE did not return calls. A First Union spokeswoman declined to comment. Universal, based in Houston, is a gas compression service company. Weatherford, also based in Houston, supplies equipment and services used in the oil and gas drilling industries.