Precision Drilling Trust and Grey Wolf, Inc. Announce Definitive Merger Agreement
25 Août 2008 - 1:00PM
Business Wire
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 web-site. 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 web site
www.sec.gov, Precision�s web site www.precisiondrilling.com, and
Grey Wolf�s web site 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.
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