Under the terms of the arrangement agreement, the value of the exchangeable shares of Nabors Exchangeco will be determined based on the weighted average trading price of the Nabors common stock on the American Stock Exchange for the three consecutive trading days ending on the third business day prior to the date of the meeting of Ryan shareholders and optionholders to approve the Arrangement. The number of Nabors Exchangeco exchangeable shares to be issued for each Ryan common share pursuant to this formula will be announced prior to the Ryan shareholder meeting. The Nabors Exchangeco exchangeable shares: (i) will have the same voting rights, dividend entitlements and other attributes as Nabors common stock, (ii) will be exchangeable, at each shareholder's option, on a one-for-one basis, into Nabors common stock, and (iii) will be listed on the Toronto Stock Exchange. The exchangeable shares will be automatically exchanged in certain events. The exchangeable shares currently trade on the Toronto Stock Exchange under the symbol NBR.X.
The arrangement agreement has been unanimously approved by the Board of Directors of Ryan and the Plan of Arrangement will require the approval of the Court of Queen's Bench of Alberta and the approval of at least 66 2/3 % of the Ryan shareholders and optionholders, voting as a single class, at a meeting to be held for that purpose. The Board of Directors of Ryan has received an opinion from its financial advisor, Peters & Co. Limited, that the consideration under the arrangement is fair, from a financial point of view, to the Ryan shareholders. The arrangement agreement contains customary closing conditions, including Nabors being satisfied regarding certain due diligence reviews of Ryan's technology, customary non-solicitation provisions and a termination fee payable by Ryan of Cdn. $1.75 million under certain circumstances. Nabors retains the right to match competing proposals should they arise.
Certain shareholders and optionholders of Ryan who own or control an aggregate of 4,450,000 Ryan common shares and 450,000 options to acquire Ryan common shares, which constitute approximately 21% of the outstanding common shares of Ryan (diluted for in-the-money options), have agreed, subject to the terms and conditions of those agreements, to vote their Ryan common shares and options in favor of the Arrangement. As a result of such agreements, Nabors may be considered to have acquired ownership, control or direction over such shares. Nabors did not previously own or exercise control or direction over any securities of Ryan.
Richard T. Ryan has agreed to remain in the capacity of President & Chief Executive Officer of Ryan.
Gene Isenberg, Nabors' Chairman and Chief Executive Officer, commented on the acquisition: "We are very pleased to be able to again increase our presence in Canada with such a highly regarded entity. Ryan has built a company with well-respected technology and capabilities. We expect to be able to utilize its products and services to broaden the range of drilling related services we can offer our customers.
"Nabors' business in Canada spans 50 years and our willingness to invest there has increased for several reasons. In the last few years, many of our key US customers have substantially increased their presence in Canada, as it has become even more strategic to the North American gas supply. Federal and provincial initiatives to reduce corporate tax rates have also increased Canada's attractiveness as an investment for Nabors."
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