Attached files
| file | filename |
|---|---|
| 8-K - NGAS Resources Inc | v206546_8k.htm |
| EX-2.1 - NGAS Resources Inc | v206546_ex2-1.htm |
| EX-10.1 - NGAS Resources Inc | v206546_ex10-1.htm |
| EX-10.3 - NGAS Resources Inc | v206546_ex10-3.htm |
| EX-10.2 - NGAS Resources Inc | v206546_ex10-2.htm |
|
NGAS
RESOURCES, INC.
120
Prosperous Place, Suite 201, Lexington, KY 40509
|
NEWS
|
|
FOR
IMMEDIATE RELEASE
|
RELEASE
|
|
Contact:
|
Investor
Relations
|
|
Phone:
|
(646)
912-3844
|
|
Fax:
|
(859)
263-4228
|
|
E-mail:
|
ngas@ngas.com
|
NGAS
RESOURCES ANNOUNCES DEFINITIVE AGREEMENT TO BE ACQUIRED BY MAGNUM HUNTER
RESOURCES
Lexington,
KY, December 27, 2010. NGAS Resources, Inc. (NASDAQ: NGAS) a leader
in horizontal drilling and completion technology in the southern Appalachian
Basin, today announced a definitive agreement with Magnum Hunter Resources
Corporation (NYSE Amex: MHR), providing for NGAS Resources to be acquired by
Magnum Hunter in an all-stock transaction. NGAS Resources is a
British Columbia corporation, and the transaction will be implemented as an
arrangement under British Columbia law.
Under the
terms of the definitive agreement (the “Arrangement Agreement”), each common
share of the Company will be transferred to Magnum Hunter for the right to
receive 0.0846 of a share of Magnum Hunter common stock. The exchange
ratio for the transaction, which will not be adjusted for subsequent changes in
market prices, was established based on an intra-day price of $6.50 for Magnum
Hunter stock, representing a value to NGAS shareholders of $0.55 per share, a
41% premium to the NGAS closing price on December 23, 2010. The value
of the transaction on an enterprise basis as of the anticipated closing date is
estimated to be approximately $98 million, based on NGAS Resources’
approximately 78.4 million fully diluted shares and total indebtedness
estimated to be outstanding at closing.
A Special
Committee of the NGAS Resources board of directors, comprised of five
independent directors, and advised by independent financial and legal advisors,
recommended the transaction to the full board. The boards of
directors of Magnum Hunter and NGAS Resources have approved the transaction,
which will require the approval of NGAS shareholders and the Supreme Court of
British Columbia. The consummation of the transaction is subject to
certain closing conditions, including the full payment by Magnum Hunter of all
remaining NGAS amortizing convertible notes due May 1, 2012 and all
outstanding borrowings under NGAS Resources’ credit agreement, as well as the
reduction in change of control severance benefits by NGAS executive
officers. The transaction is also conditioned on the restructuring of
NGAS Resources gas transportation agreements with Seminole Energy Services, LLC
on substantially the terms set forth in a letter of intent between Magnum
Hunter, a subsidiary of NGAS and Seminole, including the payment of
$10 million in cash or Magnum Hunter restricted stock, the cancellation of
approximately $7 million in remaining note installments from Seminole’s
purchase of the NGAS Appalachian gathering system in August 2009 and the right
to acquire a 50% interest in Magnum Hunter’s Marcellus gas processing
plant.
The
transactions contemplated by the Arrangement Agreement are expected to close by
March 31, 2011 or as soon as practicable thereafter. Magnum
Hunter Resources has secured committed financing from BMO Capital Markets
Corp.
On
completion of the arrangement transaction, NGAS Resources will become a
wholly-owned subsidiary of Magnum Hunter. The transaction will
combine NGAS Resources’ acreage and expertise in the southern Appalachian Basin
with Magnum Hunter’s stronger financial resources. In addition to the
Company’s plays in the Illinois and Arkoma Basins, the transaction will increase
Magnum Hunter’s position in the Appalachian Basin by approximately 300,000 acres, leverage its nearby
infrastructure and provide operational synergies. At year-end 2009,
NGAS’ proved reserves totaled 78.4 billion cubic feet
equivalents.
William
S. Daugherty, President and CEO of NGAS Resources, commented, "I am pleased to
announce this agreement, as it delivers value to our
shareholders. Magnum Hunter’s substantial financial resources,
coupled with its existing Appalachian operations, will enable the combined
operations to accelerate growth for all of its shareholder
constituencies."
In
connection with the transaction, NGAS was advised by independent financial and
legal advisors, KeyBanc Capital Markets, Inc. and Skadden, Arps, Slate, Meagher
& Flom LLP, respectively.
About
NGAS Resources
NGAS
Resources is an independent exploration and production company focused on
unconventional natural gas plays in the eastern United States, principally in
the southern Appalachian Basin. Core assets include over 345,000
acres with interests in approximately 1,400 wells and an extensive inventory of
horizontal drilling locations. NGAS also operates the gas gathering
facilities for its core Appalachian properties, providing deliverability
directly from the wellhead to the interstate pipeline.
Additional
Information about the Proposed Transaction and Where to Find It
In
connection with the proposed transaction, NGAS Resources, Inc. will file a proxy
statement and NGAS Resources, Inc. and Magnum Hunter Resources Corporation will
file other relevant materials with the SEC. Investors and security
holders of NGAS Resources, Inc. are urged to read the proxy statement and the
other relevant materials when they become available before making any voting or
investment decision with respect to the proposed transaction because they will
contain important information about the transaction and the parties to the
transaction.
2
Investors
and security holders may obtain a free copy of the proxy statement and other
relevant materials when they become available and any other documents filed by
NGAS Resources, Inc. with the SEC, at the SEC’s web site at www.sec.gov. The
proxy statement and such other documents may also be obtained for free from NGAS
Resources, Inc. by contacting NGAS Resources, Inc. at: 859-263-3948 or 120
Prosperous Place, Suite 201, Lexington, Kentucky 40509-1844 or visiting the
company’s website at www.ngas.com.
Participants
in Solicitation
NGAS
Resources, Inc., Magnum Hunter Resources Corporation and their respective
directors, executive officers and other members of management and employees,
under SEC rules, may be deemed to be participants in the solicitation of proxies
of NGAS Resources, Inc. shareholders in connection with the proposed
transaction. Investors and security holders may obtain more detailed information
regarding the names, affiliations and interests of certain of Magnum Hunter
Resources Corporation’s executive officers and directors in the solicitation by
reading the proxy statement for Magnum Hunter Resources Corporation’s 2010
Annual Meeting of Shareholders, which was filed with the SEC
on September 3, 2010, and the proxy statement relating to the
transaction and other relevant materials filed with the SEC when they become
available. Investors and security holders may obtain more detailed
information regarding the names, affiliations and interests of NGAS Resources,
Inc.’s executive officers and directors in the solicitation by reading the proxy
statement for NGAS Resources, Inc.’s 2009 Annual Meeting of Shareholders, which
was filed with the SEC on April 29, 2010, and the NGAS Resources, Inc. proxy
statement relating to the transaction and other relevant materials to be filed
with the SEC when they become available. Certain executives and
directors of NGAS Resources, Inc. have interests in the proposed transaction
that may differ from the interests of shareholders generally, including benefits
conferred under severance, retention and change of control arrangements and
continuation of director and officer insurance and
indemnification. These interests and any additional benefits in
connection with the proposed transaction will be described in the proxy
statement when it becomes available.
Safe
Harbor Statement
Except
for historical information contained herein, the statements in this release are
forward-looking and made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995 and may involve a number of risks and
uncertainties. Forward-looking statements are based on information available to
management at the time, and such forward-looking statements involve judgments.
Such forward-looking statements include, but are not limited to, statements
regarding the expected timing of the completion of the transaction; the ability
to complete the transaction considering the various closing conditions; the
benefits of such transaction and its impact on NGAS Resources’ business; the
oversupply of, or lack of demand for, NGAS Resources’ production; various events
which could disrupt NGAS Resources’ drilling schedule or operations; any
projections of economic prospects, earnings, revenues or other financial items;
any statements of the plans, strategies and objectives of management for future
operations; any statements of expectation or belief; any statements regarding
general industry conditions and competition; any statements regarding economic
conditions, such as interest rate, commodity prices and currency exchange rate
fluctuations; any statements regarding timing of development or potential
expansion or improvements; any statements regarding quantity or magnitude of oil
and gas reserves; and any statements of assumptions underlying any of the
foregoing.
In
addition, if and when the transaction is consummated, there will be risks and
uncertainties related to Magnum Hunter’s ability to successfully integrate the
operations and employees of Magnum Hunter and NGAS Resources as well as the
ability to ensure continued production or market demand for NGAS Resources’ oil
and natural gas reserves.
3
Forward-looking
statements include expressions such as “believe,” “anticipate,” “expect,”
“estimate,” “intend,” “may,” “plan,” “predict,” “will,” and similar terms and
expressions. These forward-looking statements are made based on expectations and
beliefs concerning future events affecting the company and are subject to
various risks, uncertainties and other factors relating to its operations and
business environment, all of which are difficult to predict and many of which
are beyond management control, and that could cause actual results to differ
materially from estimated results expressed in or implied by these
forward-looking statements. Such risks and uncertainties include, but are not
limited to, the risks to both companies that the acquisition of NGAS Resources
will not be consummated; market demand for oil and natural gas as well as
changes in pricing and costs; the availability of labor, equipment and
transportation; changes in weather, geologic conditions or oil or natural gas
deposits; changes in economic conditions or financial markets; changes in prices
for the company’s production or increases in input or extraction costs; changes
in pricing and assumptions and projections concerning reserves in drilling
operations; changes in plans with respect to exploration, development projects
or capital expenditures; litigation, legislative, health, environmental and
other judicial, regulatory, political and competitive developments; changes in
customer demand; pricing actions by competitors, customers, suppliers and
contractors; availability and costs of credit, surety bonds and letters of
credit; technological and operational difficulties or inability to obtain
permits encountered in connection with exploration and development activities;
labor relations matters; and changing foreign exchange rates, all of which are
described more fully in the company’s filings with the Securities and Exchange
Commission and on EDGAR and SEDAR. Forward-looking statements made in
this release, or elsewhere, speak only as of the date on which the statements
were made. New risks and uncertainties arise from time to time, and it is
impossible for management to predict these events or how they may
affect the company or anticipated results. All
forward-looking statements are qualified in their entirety by this cautionary
statement. In light of these risks and uncertainties, readers should keep in
mind that any forward-looking statement made in this release may not occur. The
company has no duty or obligation to, and does not intend to, update or
otherwise revise any forward-looking statements, whether as a result of new
information, future events or other factors, except as may be required by law.
Readers are cautioned not to place undue reliance on forward-looking
statements.
NGAS -
G
4