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December 18, 1997 - Agrees To Purchase Top Compression Service Company

NEW YORK, December 18,1997 - Castle Harlan, Inc., the New York merchant bank, announced today that an investment partnership it man-ages had signed a definitive agreement to acquire Tidewater Compression Service, Inc., a division of Tidewater, Inc. (NYSE: TDW), of New Orleans, in a transaction valued at $360 million.

 

Tidewater Compression Service (TCS), based in Houston, Texas, is one of the world's three largest providers of natural gas compression equipment and services, primarily to the energy industry. It operates pri-marily in the United States, but also has operations in Canada, Venezuela, Argentina and Australia.

 

Jeffrey M. Siegal, a Castle Harlan managing director, called TCS "a company with a strong potential for growth in a high-growth industry."

 

He said that existing management, including TCS President Steve Snider, would remain in place and that Castle Harlan expected to support the company with substantial growth capital. He said Castle Harlan would consider additional strategic acquisitions in the same or related fields in the future.

 

Siegal said Tidewater Compression had generated strong, steady cash flow under every market condition since its inception 29 years ago. He also noted that the company had grown significantly in 1994 and 1995 through the acquisitions of the compression assets of Halliburton Compression Service and Brazos Gas Compressing Company.

 

The acquisition will be made by Castle Harlan Partners III, L.P., an investment partnership managed by Castle Harlan that closed last Febru-ary with capital commitments of $630 million.

 

After the transaction has been completed, Tidewater will become the third company with a significant involvement in the energy business in Castle Harlan's portfolio. Castle Harlan Partners II owns Statia Terminals Group N.V., one of the world's largest independent marine terminal com-panies, and U.S. Synthetic Corporation, the world's largest independent manufacturer of synthetic diamonds used in oil and gas drill bits.

 

Siegal said that growth in the industry, both in the United States and internationally, will be driven by the increasing world demand for natural gas, the declining natural pressure of maturing oil and gas fields world-wide, the aging of producer-owned compressors throughout the world and the spreading trend among oil and gas producers to rent gas compressors, rather than own them.

 

Environmental concerns will also encourage increased use of natural gas, he said, in place of other carbon fuels.

 

BT Alex. Brown advised Castle Harlan on the transaction.

 

Castle Harlan was founded in 1987. The firm is headed by John K. Castle, its chairman and former president and chief executive officer of Donaldson, Lufkin & Jenrette, the Wall Street investment firm, and Leonard M. Harlan, Castle Harlan president, and former chairman and founder of The Harlan Company, a real estate investment and financial advisory firm.

 

The firm's portfolio companies have included Ethan Allen Interiors, the furniture company; Morton's Restaurant Group, the nationwide chain of upscale steakhouses; Smarte Carte, the leading airport baggage cart rental company, and Delaware Management, a major international money-management firm with assets under management of more than $32 billion. Since its founding, Castle Harlan has completed acquisitions exceeding $3 billion.