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Pinnacle Gas stockholders to receive fewer Quest Resource shares following merger amendment
Lisa Kerner
Charlotte, N.C., Feb. 6 - The boards of directors of Quest Resource Corp. and Pinnacle Gas Resources, Inc. unanimously approved an amendment to the companies' stock-for-stock merger agreement.
Under the amended and restated merger agreement, Pinnacle stockholders will receive 0.5278 of a share of Quest common stock for each share of Pinnacle common stock they own. The original agreement called for Pinnacle stockholders to receive 0.6584 of a share of Quest.
The exchange ratio was reduced based on updated Pinnacle financial forecasts, including sensitivity analyses, by Quest.
With the downward revision, Quest agreed to other changes in the merger agreement that enhance Pinnacle's deal protections, a company news release stated.
Quest's stockholders will own about 60.5% of Quest following the merger, while Pinnacle's stockholders will own the remaining 39.5%. Originally, Pinnacle's stockholders would have owned some 45% of the combined company.
The board of the combined company was reduced to six, from seven, members. Four members will be designated by Quest, and two will be designated by Pinnacle.
Quest's directors, who hold 12.8% of the outstanding shares of the company's stock, have agreed to vote their shares in favor of the deal.
"We remain committed to this strategic combination and the benefits of a combined company's broader geographic diversification of assets and deeper technical expertise," Pinnacle president and chief executive officer Peter G. Schoonmaker said in the release.
"All of the reasons that originally caused us to enter into the merger agreement with Pinnacle remain in place," Quest president and CEO Jerry D. Cash added. Cash will continue as chairman, president and CEO of the combined company and as a director.
Quest is a natural gas producer based in Oklahoma City.
Pinnacle is an independent energy company based in Sheridan, Wyo.
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