Precision Drilling proposes acquiring Grey Wolf for $9 per share; Basic Energy deal remains in effect

By Lisa Kerner

Charlotte, N.C., June 10 - Grey Wolf, Inc. said Precision Drilling Trust made an unsolicited proposal to acquire the company for $9.00 per share.

The merger consideration would consist of cash and Precision Drilling Trust units and is subject to proration so that the cash portion does not exceed one-third of the equity purchase price, a Grey Wolf news release said.

According to a Precision Drilling statement, the offer price is a 21% premium over the average closing price of Grey Wolf stock over the 30-day period preceding the date of the offer.

Precision Drilling noted it has received "a highly confident letter" from both Deutsche Bank Securities Inc. and Royal Bank of Canada in regards to debt financing for the deal.

The offer is conditioned upon completion of due diligence, a negotiated agreement and final approval by Grey Wolf stockholders, Precision Drilling said.

Precision Drilling said it believed its transaction is superior to Grey Wolf's proposed combination with Basic Energy.

Grey Wolf's board of directors said it plans to evaluate the proposal with respect to unsolicited third-party offers under the merger agreement with Basic Energy Services, Inc. and Horsepower Holdings, Inc., which is still in effect.

The agreement with Basic Energy calls for Grey Wolf shareholders to receive $1.82 in cash and 0.25 of a share of new Grey Wolf common stock for each share of Grey Wolf they currently own or, based on the exchange ratio, one share of new Grey Wolf for each four shares of Grey Wolf held in addition to the cash consideration.

Basic Energy Services shareholders will receive $6.70 in cash and 0.9195 of a share of new Grey Wolf for each share of Basic Energy Services they currently own, it was previously reported.

Houston-based Grey Wolf is the fourth-largest provider of contract land drilling services in the United States.

Precision Drilling is a Calgary, Alta., oil and gas drilling and exploration company.

Basic Energy Services is the third-largest well servicing rig contractor in the United States. The company is located in Midland, Texas.

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