RBC Pulls Allis-Chalmers Bonds
August 7, 2008
The Royal Bank of Canada yesterday pulled $350 million in senior notes due 2018 for Allis-Chalmers Energy, a Houston-based oil and gas drilling company. The bonds were scheduled to price today.
Calls to Allis-Chalmers and to RBC were not returned by press time. The proceeds from the issue are supposed to help fund Allis-Chalmers’ acquisition of onshore driller Bronco Drilling. However, the acquisition has been on shaky ground because Bronco’s shareholders—including Wexford Capital, which owns a 12.85% stake in the company— have opposed the deal, saying the offer price significantly undervalues the company.
Allis-Chalmers, which had agreed to buy the company in a cash and stock deal in January, upped its offer in June to $18.25 a share. The original offer was $16.33. Allis-Chalmers Chief Executive, Micki Hidayatallah, said in a conference call that he was frustrated with Wexford because it failed to see the value in the merger. If the deal is terminated, Allis-Chalmers would receive a $5 million breakup fee. Allis-Chalmers on Monday posted its quarterly earnings, which reportedly beat analysts’ estimates by a penny.
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