"During the past two years of our corporate restructuring, we have significantly outperformed the E&P sector and generated a substantial amount of value for our shareholders," commented Jim Payne, Chairman, President and CEO. "With cost reductions, non-core asset sales and balance sheet deleveraging largely completed, further stock price appreciation will be more a function of Nuevo's growth profile. In this respect, we are excited about this merger and believe it will generate significant value for Nuevo shareholders. This transaction provides operational synergies, an enhanced portfolio of exploitation and exploration prospects funded by substantial future cash flow, and an increased exposure to natural gas. We are confident that the anticipated benefits of this merger will be realized by PXP's management team, led by Jim Flores, who has a proven track record of operating in Nuevo's core areas, integrating acquisitions and creating value for shareholders. Finally, the combined organization will have increased liquidity and improved access to capital which will better position the company for future growth."
Major Terms and Conditions
Under the terms of the definitive agreement, Nuevo stockholders will receive 1.765 shares of PXP's common stock for each share of Nuevo common stock, which based on PXP's February 11, 2004 closing price of $15.89 per share, equates to $28.05 per Nuevo common share. The transaction is expected to qualify as a tax free reorganization under Section 368(a) and is expected to be tax free to PXP stockholders and tax free for the stock consideration received by Nuevo stockholders. The Boards of Directors of both companies have approved the merger agreement and each has recommended it to their respective stockholders for approval. The transaction will remain subject to stockholder approval from both companies and other customary conditions. Post closing, Nuevo stockholders will own approximately 47% of the combined company and PXP stockholders will own approximately 53% of the combined company.
The size of PXP's Board of Directors will increase by two directors to be appointed by Nuevo. The transaction will be accounted for as a purchase of Nuevo by PXP under purchase accounting rules and PXP will continue to use the full cost method of accounting for its oil and gas properties.
Mr. James C. Flores will remain as Chairman and Chief Executive Officer and PXP's current executive staff will continue in their capacities including: Mr. John T. Raymond (President and Chief Operating Officer), Mr. Stephen A. Thorington (Executive Vice President and Chief Financial Officer), Mr. John F. Wombwell (Executive Vice President and General Counsel) and Mr. Thomas M. Gladney (Executive Vice President Exploration and Production).
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