Parallel Petroleum has entered into a definitive agreement for the Company to be acquired by an affiliate of Apollo Global Management, LLC, a leading global alternative asset manager, in a transaction valued at approximately $483 million, including the assumption or repayment of approximately $351 million of net indebtedness. The agreement was unanimously approved by Parallel's Board of Directors.
Under the terms of the agreement, Parallel stockholders would receive $3.15 per share in cash, representing a premium of 56 percent over Parallel’s average closing share price over the past thirty trading days and 63 percent over Parallel’s average closing share price over the past sixty trading days. An affiliate of Apollo will commence a tender offer to purchase for cash all of the outstanding shares of the Company's Common Stock, and the associated preferred stock purchase rights, at a price of $3.15 per share, for a total consideration of approximately $132 million. The tender offer is expected to commence on or before September 24, 2009 and to expire on the 20th business day following and including the commencement date, unless extended in accordance with the terms of the merger agreement and the applicable rules and regulations of the Securities and Exchange Commission. Following the completion of the tender offer, the parties will complete a second-step merger in which any remaining shares of the Company will be converted into the right to receive the same price per share paid in the tender offer.
"The Board considered a range of potential alternatives, including continuing to operate as an independent entity, the returns and dilution associated with issuing additional equity in a public or private offering, the possibility of the sale of certain assets, and combinations with other merger partners," said Jeffrey Shrader, Parallel's Chairman of the Board. "After conducting an exhaustive evaluation of recapitalization and corporate sale alternatives, our board of directors unanimously concluded, after in-depth consideration, that this transaction with Apollo is in the best interests of our shareholders."
Commenting on the transaction, Sam Oh, Partner at Apollo, said, "We believe Parallel's high-quality assets and its outstanding management team will be a positive addition to our investment portfolio and we look forward to working with the Company."
Larry Oldham, Parallel's President and Chief Executive Officer commented, "Apollo's interest in the Company is a clear recognition of the attractiveness of Parallel, its business plan and the success that has been achieved. Apollo has a strong track record of growing businesses. Under its ownership, Parallel will be better capitalized to execute its current business plan and develop new opportunities for growth."
There is no financing condition to the obligations to consummate the transaction, and funds managed by Apollo have committed to provide $283.2 million of equity to complete the transaction.
The transaction does not require the consent of Parallel's bondholders, but as required by its indenture, the Company will offer to repurchase all $150 million of the Company's 10.25% Senior Notes due 2014, at 101% of face value.
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