CALGARY, ALBERTA -- (Marketwired) -- 05/13/13 -- Wenzel Downhole Tools Ltd. ("Wenzel" or the "Company") (TSX: WZL) is pleased to announce that Wenzel, Basin Tools L.P. ("Basin Tools") and 1748017 Alberta Limited (the "Purchaser"), an indirect wholly-owned subsidiary of Basin Tools, have entered into an arrangement agreement dated May 13, 2013 (the "Arrangement Agreement"), pursuant to which the Purchaser will acquire all of the issued and outstanding common shares of Wenzel (the "Common Shares") not owned by Basin Tools by way of a plan of arrangement under the Business Corporations Act (Alberta) (the "Arrangement").
Each Wenzel shareholder will receive CDN$2.25 in exchange for each Common Share held (the "Cash Consideration"). The Cash Consideration represents a 30.8% premium to the last three months' volume weighted average trading price of the Common Shares on the Toronto Stock Exchange.
The transaction is valued at approximately CDN$98.80 million, including the assumption of net debt (approximately CDN$15.76 million as of March 31, 2013), as well as the value of the Common Shares and preferred shares of the Company (the "Preferred Shares") already owned by Basin Tools.
The board of directors of Wenzel, following receipt and review of a unanimous recommendation by a special committee of independent directors (the "Special Committee"), and with nominees from Basin Tools abstaining, has unanimously determined that the Cash Consideration is fair and that the Arrangement is in the best interests of the Company and recommends that shareholders vote in favour of the Arrangement. Raymond James Ltd. has provided the Special Committee with a verbal opinion that the Cash Consideration under the Arrangement is fair, from a financial point of view, to Wenzel shareholders, excluding Basin Tools. Raymond James Ltd. has also been retained to provide a formal valuation of the Common Shares to the Special Committee in accordance with Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions, which will be included in an information circular to be mailed to Wenzel shareholders.
Basin Tools currently holds 8,587,473 Common Shares and 4,600,000 Preferred Shares, which are convertible into Common Shares on a one-for-one basis, or approximately 37% of the Company's total shares issued and outstanding.
The Purchaser has entered into voting support agreements with the directors and senior officers of the Company to vote in favour of the Arrangement.
The Arrangement is subject to approval by the Court of Queen's Bench of Alberta, and approval of a special majority of at least 66 2/3% of the holders of Common Shares, Preferred Shares and options to purchase Common Shares voting as a single class, as well as a simple majority of shareholders excluding Basin Tools, at a special meeting of shareholders of Wenzel to approve the transaction (the "Special Meeting"). The transaction is also subject to customary closing conditions and the arrangement of suitable financing at the discretion of Basin Tools.
The Special Meeting is expected to be held in July of 2013. An information circular is expected to be mailed to Wenzel shareholders in June.
Wenzel has agreed that it will not solicit or initiate any discussions concerning the pursuit of any other acquisition proposals. Wenzel has also agreed to pay a termination fee of CDN$1.85 million to Basin Tools in certain circumstances. In addition, Basin Tools has the right to match any competing proposal for Wenzel in the event that such a proposal is made.
Raymond James Ltd. is acting as financial advisor to Wenzel with respect to the transaction.
Macquarie Capital Markets Canada Ltd. is acting as financial advisor to Basin Tools with respect to the transaction.
About Wenzel Downhole Tools Ltd.
The Company designs, manufacturers, sells and rents downhole drilling tools for use in the oil and gas industry, operating in Canada, the United States and internationally. The Company's shares trade on the Toronto Stock Exchange under the symbol "WZL".
The Company's Canadian sales, manufacturing and servicing facilities are located in Edmonton, Alberta and its sales and servicing facilities are located in Conroe, Texas; Morgantown, West Virginia; Casper, Wyoming; Oklahoma City, Oklahoma; and Celle, Germany. The corporate office is located in Calgary, Alberta.
Certain statements contained in this press release constitute "forward-looking statements". These statements are based on current beliefs and assumptions of management, however are subject to known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from the forward-looking statements in this press release. Forward-looking statements in this press release may include, without limitation, timing for completion of the Arrangement. In addition to other expectations and assumptions which may be identified in this press release, assumptions have been made regarding and are implicit in, among other things, the timely receipt of any required regulatory approvals (including Court and shareholder approvals). Readers are cautioned that the foregoing list is not exhaustive of all expectations and assumptions which have been used. Although the Company believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because the Company can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. For additional information with respect to certain of these beliefs, assumptions, risks and uncertainties, please refer to The Company's Annual Information Form for fiscal 2012 available on SEDAR at http://www.sedar.com.
Forward-looking statements are based on estimates and opinions of management of the Company at the time the statements are presented. The Company may, as considered necessary in the circumstances, update or revise such forward-looking statements, whether as a result of new information, future events or otherwise, but the Company undertakes no obligation to update or revise any forward-looking statements, except as required by applicable securities laws.
THE TORONTO STOCK EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY AND ACCURACY OF THIS NEWS RELEASE
Wenzel Downhole Tools Ltd.
President & CEO
(403) 265-8154 (FAX)
Wenzel Downhole Tools Ltd.
Chair of the Special Committee
(403) 265-8154 (FAX)
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