WSP Holdings Limited, a leading Chinese manufacturer of API and non-API seamless casing, tubing and drillpipes used in oil and natural gas exploration, drilling and extraction, and other pipes and connectors, today announced that it has entered into an Agreement and Plan of Merger with WSP OCTG GROUP Ltd., a company owned by H.D.S.Investments LLC, and JM OCTG GROUP Ltd., a company with limited liability and adirect wholly-owned subsidiary of Parent.
The transaction contemplated under the Merger Agreement represents a total transaction value of approximately $893.6 million, including the assumption of the Company's outstanding debt.
Subject to satisfaction or waiver of the closing conditions in the Merger Agreement, Merger Sub will merge with and into the Company, with the Company continuing as the surviving corporation. Pursuant to the Merger Agreement, each of the Company's ordinary shares issued and outstanding immediately prior to the effective time of the Merger will be cancelled and cease to exist in exchange for the right to receive $0.32 without interest, and each American Depositary Share, which represents ten Shares, will represent the right to surrender the ADS in exchange for $3.20 in cash without interest, except for (a) Shares held of record by Expert Master Holdings Limited, a company wholly-owned by Mr. Longhua Piao, the Company's Chairman and Chief Executive Officer, and UMW China Ventures (L) Ltd., which will be contributed to Parent immediately prior to the Merger in exchange for equity interests of Parent, and (b) Shares owned by shareholders who have validly exercised and have not effectively withdrawn or lost their rights to dissent from the Merger under the Cayman Islands Companies Law, which will be cancelled for the right to payment of fair value of the Dissenting Shares in accordance with the Cayman Islands Companies Law.
The $0.32 per Share or $3.20 per ADS offer represents a premium of 60.0%over the Company's closing price of $2.00 per ADS (adjusted for the change inthe ratio of the ADSs from one ADS representing two ordinary shares to one ADS representing ten ordinary shares effective February 15, 2012) on December 12,2011, the last trading day prior to the Company's announcement of its receipt ofa "going-private" proposal, and a premium of 52.5% to the volume-weightedaverage closing price calculated using the market data quoted on the New YorkStock Exchange of the ADSs during the 60 trading days prior to December 12, 2011.
H.D.S. Investments LLC has provided the Company with a limited guarantee in favor of the Company guaranteeing the payment of certain monetary obligations of Parent and Merger Sub arising under the Merger Agreement up to a capped amount. H.D.S. Investments LLC has committed, at or prior to the closing of the Merger, to contribute to Parent, and to cause Parent to contribute to Merger Sub, an equity investment in an amount sufficient to fund the merger consideration and related transaction expenses upon the terms set forth in an equity commitment letter.
The Company's Board of Directors, acting upon the unanimous recommendation of a committee of the Board of Directors comprised solely of independent and disinterested directors, approved the Merger Agreement and the Merger and resolved to recommend that the Company's shareholders vote to authorize and approve the Merger Agreement and the Merger. The Special Committee negotiated the terms of the Merger Agreement with the assistance of its legal and financial advisors.
The Merger, which is currently expected to close during the second quarter of 2013, is subject to the authorization and approval of the Merger Agreement by an affirmative vote of shareholders representing at least two-thirds of the Shares present and voting in person or by proxy as a single class at a meeting of the Company's shareholders, as well as certain other customary closing conditions. EMH and UMW collectively beneficially own sufficient Shares to approve the Merger Agreement and the Merger and have agreed to vote in favor of such approval. If completed, the Merger will result in the Company becoming a privately-held company and its ADSs will no longer be listed on the NYSE.
Houlihan Lokey (China) Limited is serving as financial advisor to the Special Committee, Kirkland & Ellis is serving as U.S. legal advisor to the SpecialCommittee, and Conyers Dill & Pearman is serving as Cayman Islands legaladvisor to the Special Committee. Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP is serving as legal advisor to H.D.S. Investment LLC.
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