Wexford continues to oppose merger of Bronco Drilling, Allis-Chalmers

By Lisa Kerner

Charlotte, N.C., Aug. 4 - Wexford Capital LLC reiterated its opposition to the proposed merger of Bronco Drilling Co. and Allis-Chalmers Energy, Inc. in an Aug. 4 letter to Bronco's board and chief executive officer D. Frank Harrison.

The investor sent a similar letter to the company on July 29, to which Wexford said Bronco Drilling failed to respond.

"While we have no objection to a sale or merger of Bronco, we object to the Allis-Chalmers transaction because we believe it substantially undervalues Bronco," the Aug. 4 letter stated.

Wexford also accused Bronco of "selectively disclosing information regarding the proposed merger."

Specifically, Wexford said Bronco "trumpets" Glass Lewis & Co.'s recommendation in favor of the merger but ignored the report by Proxy Governance, Inc. recommending that Bronco shareholders vote against the deal.

In addition, Bronco hasn't advised its shareholders that three of its largest shareholders have stated their opposition to the merger, according to Wexford.

Wexford also sent an e-mail letter to chairman of the board of directors of Allis-Chalmers Micki Hidayatallah regarding the merger agreement. A copy of the e-mail was included in a schedule 13D filed with the Securities and Exchange Commission.

In the e-mail, Wexford took Hidayatallah to task for his reference to the investor during a company conference call.

Wexford asked Hidayatallah to respond if he feels so strongly that the investor's analysis of the proposed merger is wrong.

Previously, Wexford, with a 12.85% ownership interest in Bronco, said it intends to vote against the merger at the upcoming shareholder meeting.

Wexford noted it founded Bronco, oversaw its growth and took it public in 2005.

On Jan. 24, Allis-Chalmers agreed to acquire Bronco Drilling in a cash and stock deal valued at $437.8 million.

Bronco Drilling, located in Edmond, Okla., provides contract land drilling and workover services to oil and gas exploration companies.

Houston-based Allis-Chalmers provides services and equipment to oil and natural gas exploration and development companies.

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