Precision Drilling Trust ("Precision") (TSX: PD.UN) (NYSE: PDS) and
Grey Wolf, Inc. ("Grey Wolf") (AMEX: GW) today announced that their
Board of Trustees and Board of Directors, respectively, unanimously
approved a definitive merger agreement pursuant to which Precision
will acquire Grey Wolf.
The combination of Precision and Grey Wolf will have land
drilling operations in virtually every conventional and
unconventional oil and gas basin in the lower 48 United States and
Canada with an emerging presence in Mexico. The combination of Grey
Wolf's deep drilling capabilities and Precision's high performance
systems and technology provides a foundation for immediate
international expansion to pursue global oil drilling
opportunities.
- Under the terms of the agreement, Grey Wolf shareholders will
receive US$5.00 in cash and 0.1883 newly-issued Precision trust
units ("Units") for each Grey Wolf common share on a fully-diluted
basis, for aggregate consideration of US$1.12 billion in cash and
42.0 million Units. Grey Wolf shareholders will be able to elect to
receive cash or Units, subject to pro-ration.
- The consideration represents approximately a 4.5% increase in
the aggregate number of Units offered to Grey Wolf shareholders
since Precision's last public announcement of its intention to
acquire Grey Wolf.
- Grey Wolf's Board of Directors believes this consideration
represents a substantial premium over an 'unaffected' Grey Wolf
stock price without the influence of Precision's previous public
announcements regarding its desire to acquire Grey Wolf.
- The transaction is expected to be highly accretive to
Precision's cash flow per Unit.
- Existing Grey Wolf shareholders will own approximately 25% of
the combined entity and three of the current Grey Wolf directors
will be added to the Board of Directors of Precision Drilling
Corporation, the administrator of Precision Drilling Trust, at
closing.
- Financing is not a condition to closing of the merger.
Precision has committed financing for the cash portion of the
consideration and sufficient funding to continue its strategic
organic growth plan.
The combination is expected to increase value for Grey Wolf's
shareholders by enabling the combined entity to capitalize more
effectively on strong industry fundamentals in North America. Grey
Wolf's highly experienced people, turnkey drilling capability and
its technologically advanced rigs will enhance Precision's ability
to execute its strategy to expand its high performance, high value
drilling business in the United States and creates a solid platform
for international expansion. In addition to drilling, Precision's
Production and Completion segment in Canada provides Grey Wolf
shareholders an investment in new business lines associated with
the full life cycle of oil and natural gas wells including service
rigs, rental equipment and well snubbing.
The transaction will enhance Precision's leadership position in
the North American oil field services sector and represents an
important milestone in Precision's long-term strategy for expansion
beyond Canada. The combined company will continue to focus on
providing a safe work environment for all its employees and will
benefit through the sharing of best practices. The combination also
provides synergies to secure greater cost advantage through the
adoption of common operational support systems including
procurement, maintenance, rig manufacturing and enterprise wide
information systems.
The transaction will establish scale for Precision as one of the
largest land drillers in North America with a combined fleet of 371
drilling rigs. The combined company will also provide 229 service
rigs, camp and catering, procurement, rig manufacturing and repair,
snubbing, rentals, wastewater treatment and a turnkey drilling
business. On a pro-forma basis for the 12 months ended June 30,
2008, combined revenue was US$1.8 billion.
Grey Wolf reached agreement with Precision following its
previously announced review of strategic alternatives for enhancing
shareholder value. This review included an update to Grey Wolf's
existing strategic plan and, ultimately, active solicitation of
interest among a broad range of potential strategic and financial
buyers for Grey Wolf, with the assistance of its independent
financial advisors, UBS Investment Bank.
Commenting on the transaction, Kevin Neveu, CEO of Precision
Drilling Corporation, stated "The merger with Grey Wolf is a
perfect strategic fit for both companies. Grey Wolf's customer
base, experienced employees and rig fleet will be enhanced by
Precision's high performance systems and Super Series rig
technology. Together we can deliver high value services that will
provide significant value to our customers, employees and
securityholders. We are well positioned to be the premier provider
of drilling services to the emerging unconventional gas and oil
plays throughout North America, from the Haynesville shale in
Louisiana to the Horn River development in north-eastern British
Columbia. Further, the combination will immediately strengthen the
platform for Precision's global drilling strategy with increased
scale, deep drilling rigs and great people." Mr. Neveu stated "We
will look forward to welcoming all Grey Wolf employees to the
Precision family."
Thomas P. Richards, Chairman, President and CEO of Grey Wolf
said, "Grey Wolf's Board of Directors believes this improved offer
from Precision is in the best interests of Grey Wolf shareholders,
customers, and employees and we are pleased we have been able to
reach this agreement. Grey Wolf shareholders will be able to
receive immediate value for a portion of their shares through the
cash component of the merger consideration and will have the
opportunity to participate in the upside as securityholders in a
combined company whose scale, financial strength and strategic
advantages position it well for future growth. Our shareholders
should know that the Grey Wolf Board conducted a rigorous
evaluation of alternatives and we believe the Precision merger best
serves their interests.
The Precision merger recognizes the potential inherent in Grey
Wolf's asset base. Our two drilling companies have also built a
long-standing reputation with customers for safety, reliability and
quality in their drilling operations. The technical capabilities of
our combined rig fleets make a formidable asset base and will
expand service to our loyal US customers. For the employees of Grey
Wolf, this provides an historic opportunity to participate and lead
in the development of a global drilling company with leading
technology."
Under the terms of the Agreement, Grey Wolf's shareholders will
have the ability to elect to receive cash or Units subject to
pro-ration, where the maximum amount of cash to be paid by
Precision will be approximately US$1.12 billion, and the maximum
number of Units will be approximately 42.0 million. These maximums
take into account the conversion of Grey Wolf's convertible debt
securities and stock options, totaling approximately 223 million
fully diluted Grey Wolf shares. These maximum aggregate amounts
translate to US$5.00 in cash and 0.1883 of a Unit for each share of
Grey Wolf stock.
Precision has received commitments from Deutsche Bank
Securities, Royal Bank of Canada, HSBC Bank and The Toronto
Dominion Bank to finance the cash portion of the transaction.
Upon completion of the transaction, Precision will remain
headquartered in Calgary, Alberta with its United States operations
headquartered in Houston, Texas. Precision will maintain Grey
Wolf's principal offices and facilities and will offer attractive
opportunities for all of Grey Wolf's employees to have continued
roles with Precision. It is anticipated that the Grey Wolf name
will continue to be used for a period of time.
Precision's contract drilling operations leadership team in the
United States will be a combination from both companies' management
teams and led by David Crowley, currently Executive Vice President
and Chief Operating Officer of Grey Wolf, who will be President of
Precision's US operations.
Completion of the transaction is subject to Grey Wolf
shareholder and customary regulatory approvals. The transaction is
not subject to approval by Precision Unitholders. The Boards and
management teams of both Precision and Grey Wolf will work jointly
and promptly to prepare the necessary regulatory filings. It is
anticipated that the proxy statement will be mailed to Grey Wolf
shareholders by the end of the third quarter with the special
meeting of shareholders to be held before the end of 2008.
Advisers and Counsel
Deutsche Bank Securities Inc. and RBC Capital Markets are acting
as financial advisors to Precision on the transaction. Precision's
legal counsel are Mayer Brown LLP, Bennett Jones LLP and Felesky
Flynn LLP.
UBS Investment Bank is acting as exclusive financial advisor to
Grey Wolf on the transaction. Grey Wolf's legal counsel are Porter
& Hedges LLP, Blake, Cassels & Graydon LLP and Gardere
Wynne Sewell LLP.
About Precision
Precision is a leading provider of safe, high performance energy
services to the North American oil and gas industry. Precision
provides customers with access to an extensive fleet of contract
drilling rigs, service rigs, camps, snubbing units, wastewater
treatment units and rental equipment backed by a comprehensive mix
of technical support services and skilled, experienced personnel.
Precision is headquartered in Calgary, Alberta, Canada. Precision
is listed on the Toronto Stock Exchange under the trading symbol
"PD.UN" and on the New York Stock Exchange under the trading symbol
"PDS". For more information about Precision, go to
http://www.precisiondrilling.com.
About Grey Wolf
Grey Wolf is a leading provider of turnkey and contract oil and
gas land drilling services in the United States. Grey Wolf operates
from divisions in South Texas, Gulf Coast, Ark-La-Tex,
Mississippi/Alabama, Mid-Continent, Rocky Mountain regions, and
Mexico. Grey Wolf is headquartered in Houston, Texas, USA. Grey
Wolf, Inc. is listed on the American Stock Exchange under the
trading symbol "GW". For more information about Grey Wolf, go to
http://www.gwdrilling.com.
Media Conference
Precision and Grey Wolf have scheduled a joint conference call
and webcast to begin promptly at 10:00 am CT (9:00 am MT) on
Monday, August 25, 2008.
The conference call dial in numbers are 1 (866) 223-7781 or
(416) 641-6140. A live webcast of the conference call will be
accessible on Precision's website at www.precisiondrilling.com by
selecting "Investor Centre", then "Webcasts" and on Grey Wolf's
website at www.gwdrilling.com. Shortly after the live webcast, an
archived version will be available for approximately 30 days on
each company's website.
An archived recording of the conference call is expected to be
available one day after the completion of the call until September
1, 2008 by dialing 1 (800) 408-3053 or (416) 695-5800, pass code
3269382#.
Cautionary Statements Regarding Forward-Looking Information and
Statements
Statements about Grey Wolf's and Precision's outlook and all
other statements in this news release other than historical facts
are forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements rely on a number of assumptions concerning future events
and are subject to a number of uncertainties and factors, many of
which are outside Grey Wolf's and Precision's control, which could
cause actual results to differ materially from such statements.
Forward-looking information includes, but is not limited to,
statements regarding the proposed merger, including expected
combined financial and operating results; the expected amount and
timing of operating synergies; and whether and when the
transactions contemplated by the Merger Agreement will be
consummated. Among the factors that could cause results to differ
materially from those indicated by such forward-looking statements
are the failure to realize anticipated synergies; the result of the
review of the proposed merger by various regulatory agencies and
any conditions imposed in connection with consummation of the
proposed merger; failure to receive the approval of the proposed
merger by the shareholders of Grey Wolf and satisfaction of various
other conditions to the closing of the merger contemplated by the
Merger Agreement. These forward-looking statements are also
affected by the risk factors, forward-looking statements and
challenges and uncertainties described in Grey Wolf's Annual Report
on Form 10-K for the fiscal year ended December 31, 2007 and
Precision's Annual Report on Form 40-F for the fiscal year ended
December 31, 2007, and those set forth from time to time in Grey
Wolf's and Precision's filings with the Securities and Exchange
Commission, which are available through Grey Wolf's and Precision's
websites at www.gwdrilling.com and www.precisiondrilling.com.
This press release contains statements that may constitute
"forward-looking information" or "forward-looking statements"
(collectively, "forward-looking information") within the meaning of
applicable Canadian securities legislation. This forward-looking
information includes, among others, statements regarding business
strategy, plans and other expectations, beliefs, goals, objectives,
information and statements about possible future events. Specific
forward-looking information contained in this press release include
statements regarding Precision's proposed business combination with
Grey Wolf, the completion of the business combination and the
outcome of the business combination, as well as statements
regarding transaction values, accretion, ownership levels, and
revenue resulting from the completion of the proposed transaction.
Readers are cautioned not to place undue reliance on such
forward-looking information. Forward-looking information is based
on current expectations, estimates and assumptions that involve a
number of risks, which could cause actual results to vary and in
some instances to differ materially from those anticipated by
Precision and described in the forward-looking information
contained in this press release. Among the various factors that
could cause results to vary materially from those indicated in the
forward-looking information include failure to realize anticipated
synergies, the result of the review of the proposed business
combination by regulatory authorities, and failure to receive
approval of the proposed business combination by Grey Wolf's
shareholders. No assurance can be given that any of the events
anticipated by the forward-looking information will transpire or
occur or, if any of them do so, what benefits Precision will derive
therefrom.
Additional Information and Where to Find It
In connection with the proposed merger, Precision will file a
registration statement, which will include a proxy statement of
Grey Wolf and other materials, with the Securities and Exchange
Commission. PROSPECTIVE INVESTORS AND SECURITYHOLDERS ARE URGED TO
CAREFULLY READ THE REGISTRATION STATEMENT AND THE PROXY
STATEMENT/PROSPECTUS AND THESE OTHER MATERIALS REGARDING THE
PROPOSED TRANSACTION WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT GREY WOLF, PRECISION, LOBOS
CORPORATION, A WHOLLY-OWNED SUBSIDIARY OF PRECISION CREATED AS A
SPECIAL-PURPOSE ACQUISITION VEHICLE, AND THE PROPOSED TRANSACTION.
Prospective investors and securityholders may obtain a free copy of
the registration statement and the proxy statement/prospectus when
they are available and other documents containing information about
Grey Wolf and Precision, without charge, at the SEC's website
www.sec.gov, Precision's website www.precisiondrilling.com, and
Grey Wolf's website www.gwdrilling.com. Copies of the registration
statement and the proxy statement/prospectus and the SEC filings
that will be incorporated by reference therein may also be obtained
for free by directing a request to either Investor Relations,
Precision Drilling Trust, (403) 716-4500 or to Investor Relations,
Grey Wolf, Inc., (713) 435-6100.
Participants in the Solicitation
Grey Wolf and Precision and their respective trustees,
directors, officers and certain other members of management may be
deemed to be participants in the solicitation of proxies from Grey
Wolf's shareholders in respect of the proposed merger. Information
about the directors and executive officers of Grey Wolf and their
ownership of Grey Wolf common stock can be found in Grey Wolf's
proxy statement for its 2008 annual meetings of stockholders as
filed with the SEC on April 8, 2008. Information concerning
directors and certain of executive officers of Precision is
included in its Annual Report on Form 40-F on file with the SEC.
Additional information about the interests of such persons in the
solicitation of proxies in respect of the proposed merger will be
included in the registration statement and the joint proxy
statement/prospectus to be filed with the SEC in connection with
the proposed transaction.
Contacts: Precision Drilling Corporation Kevin Neveu Chief
Executive Officer (403) 716-4500 (403) 264-0251 (FAX) Precision
Drilling Corporation Doug Strong Chief Financial Officer (403)
716-4500 (403) 264-0251 (FAX) Precision Drilling Corporation 4200,
150 - 6th Avenue S.W. Calgary, Alberta T2P 3Y7 Grey Wolf, Inc.
David W. Wehlmann Executive Vice President and Chief Financial
Officer (713) 435-6100 (713) 435-6171 (FAX) Grey Wolf, Inc. 10370
Richmond Ave, Suite 600 Houston, TX 77042
Grey Wolf (AMEX:GW)
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