Allis-Chalmers Closes Tender Offers for Senior Notes

Allis-Chalmers announced that pursuant to its previously announced tender offers, it has accepted for purchase an aggregate of $74,762,000 in principal amount of its senior notes, comprised of $30,562,000 aggregate principal amount of its 9.0% Senior Notes due 2014 and $44,200,000 aggregate principal amount of its 8.5% Senior Notes due 2017. The purchased Notes represented approximately 12.0% and 17.7% of the aggregate principal amounts of the 9.0% Notes and the 8.5% Notes, respectively, outstanding immediately prior to today's tender offer settlement.

The tender offers expired at 5:00 p.m., Eastern Time, on June 26, 2009. Pursuant to the terms of the tender offers, holders of 9.0% Notes that were accepted for purchase received total consideration of $650 per $1,000 principal amount and holders of 8.5% Notes that were accepted for purchase received total consideration of $600 per $1,000 principal amount. In the aggregate, holders of purchased Notes received a total of $46,385,300 plus accrued and unpaid interest on the Notes to, but not including, June 29, 2009.

As previously announced, Allis-Chalmers obtained the funds necessary for its purchase of Notes and other planned debt retirement from its recently completed backstopped rights offering and private placement of convertible preferred stock, pursuant to which it received aggregate gross proceeds of approximately $125.6 million. In addition to the purchase of the Notes, Allis-Chalmers will also apply $35.0 million of such proceeds to the repayment of all outstanding borrowings under its $90.0 million revolving credit facility, and it expects in the near future to prepay an additional $8.0 to $10.0 million of other debt.

Micki Hidayatallah, Allis-Chalmers' Chairman and CEO stated, "We are very grateful for the commitment that our shareholders have made to the company with their substantial support of the rights offering. We look forward to working with Lime Rock Partners. In addition to their financial commitment, they bring tremendous experience from their previous investments in the oilfield services sector. We believe the new equity and the decrease in our debt will reposition our company financially. We will have reduced our debt by close to $120.0 million and reduced interest expense by approximately $9.0 million per year. Additionally, we estimate we will have cash on hand of approximately $41.0 million and a fully available $90.0 million revolving line of credit."

RBC Capital Markets Corporation acted as the dealer manager for the tender offers, and Global Bondholder Services Corporation served as the information agent and depositary.

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