The premier contract drilling fleets of Trinidad Drilling Ltd. and CanElson Drilling Inc. will be combined after the companies combine under a court-approved plan, Trinidad said June 11. The combined company will have 163 land drilling rigs, including eight international rigs under Trinidad’s joint venture.
Trinidad will acquire all of CanElson’s issued and outstanding common shares in exchange for cash and Trinidad common shares. CanElson shareholders have the option to receive a 1.0631 Trinidad shares or C$4.90 in cash per share, pending a C$50 million cash payment by Trinidad, the company said.
The transaction is worth C$505 million, including assumption of about C$36 million of CanElson debt, including transaction costs.
Trinidad’s cash balances and bank credit facilities will finance the cash portion of the transaction. At closing, current Trinidad shareholders will own about 60% and CanElson shareholders will own about 40% of the combined company.
"The transaction is a compelling strategic fit and offers shareholders, customers, and employees of both companies a significant opportunity, owing to the complementary nature of our respective operations," said Lyle Whitmarsh, Trinidad's CEO. "Our highly experienced and capable leadership will consist of members of the management teams of Trinidad and CanElson, both of which have consistently generated above average utilization rates in Canada and the US."
Randy Hawkings, president and CEO of CanElson, said rigs will serve domestic oil basins and oil areas in Canada, Mexico and Saudi Arabia.
CanElson has 51 gross drilling rigs that are 5.6 years old, on average, Trinidad said.
The transaction is scheduled to close in August, subject to TSX Exchange, court and regulatory approvals and other conditions including a special meeting of CanElson shareholders. The boards of both companies approved the transaction, Trinidad said.
After the transaction closes, three CanElson director nominees will join Trinidad’s board, and several CanElson management members, including Randy Hawkings, will assist the combined company’s integration and management.
Raymond James Ltd. is Trinidad’s financial adviser. Peters & Co. Ltd. is CanElson’s financial adviser. Lightyear Capital is CanElson’s strategic adviser.
Trinidad Drilling Ltd. is based in Calgary, Alberta.
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