Precision Offers $10 per Share for Grey Wolf
Wednesday, June 25, 2008
Precision Drilling Trust confirmed that it has provided Grey Wolf, Inc. with a final business combination proposal for US$10.00 per Grey Wolf share. Precision is strongly of the view that its proposal offers Grey Wolf shareholders a superior alternative to a merger with Basic Energy Services, Inc. and represents a compelling long-term value creation opportunity for both Precision and Grey Wolf securityholders.
Precision's final proposal provides for the acquisition of all of the common shares of Grey Wolf for US$10.00 per share (on a fully diluted basis), comprised of cash and trust units of Precision, at the election of Grey Wolf shareholders, subject to proration such that the cash portion does not exceed 50% of the aggregate offer price. Precision's proposal is in relation to Grey Wolf alone and does not, and will not, extend to a merged Grey Wolf and Basic. A copy of Precision's proposal letter to Grey Wolf is attached to this press release.
The US$10.00 per share offer implies a multiple of 8.1 times consensus 2008 estimated cash flow per share and represents a 34% premium to the average closing price over the thirty trading days prior to June 8, 2008, the date Precision's initial proposal was provided to Grey Wolf. In addition, this proposal represents a 21% premium to Grey Wolf's closing price of US$8.28 on June 9, 2008, the day before Precision's initial proposal to Grey Wolf became public.
"We believe our offer to Grey Wolf represents a compelling strategic opportunity which is in the best interests of the securityholders of both companies. Our proposal is fully priced and we will not make any further revisions. We are prepared to commence our due diligence and work towards the execution of a definitive agreement immediately. If the Grey Wolf board of directors chooses to reject our proposal, we will cease all current efforts to pursue a merger with Grey Wolf" said Kevin Neveu, Precision's Chief Executive Officer.
Precision has received letters from Deutsche Bank Securities Inc. and Royal Bank of Canada with respect to each being highly confident in their ability to provide Precision with the debt financing required to complete the proposed business combination.
Precision expects to maintain Grey Wolf's principal offices and facilities and to offer attractive opportunities for Grey Wolf's employees to have continued roles in the combined entity. Precision is also prepared to discuss Grey Wolf nominees to the Board of Directors of Precision Drilling Corporation, the administrator of Precision.