||ALLIS-CHALMERS ENERGY INC.
Allis-Chalmers Energy Announces Closing of Transactions with Lime Rock
Partners and Receipt of Gross Proceeds of Approximately $86.1 Million
Houston, Texas, June 26, 2009 Allis-Chalmers Energy Inc. (NYSE: ALY) today announced the
closing of its previously announced private placement transactions with Lime Rock Partners V, L.P.
Lime Rock had agreed, subject to certain terms and conditions, to backstop Allis-Chalmers
previously announced rights offering by purchasing from Allis-Chalmers, at a price of $2.50 per
share, shares not purchased by Allis-Chalmers existing stockholders. Pursuant to this backstop
commitment, Lime Rock purchased from Allis-Chalmers 19,889,044 shares of Allis-Chalmers common
stock, representing approximately 27.9% of Allis-Chalmers common stock outstanding after the
closing of the rights offering and the backstop commitment. The backstop commitment yielded gross
proceeds to Allis-Chalmers of approximately $49.7 million.
Lime Rock had also agreed, subject to certain terms and conditions, to purchase from
Allis-Chalmers shares of newly-issued 7.0% convertible perpetual preferred stock. Pursuant to this
preferred stock purchase commitment, Lime Rock purchased from Allis-Chalmers 36,393 shares of
convertible preferred stock at a price of $1,000.00 per share. The shares of convertible preferred
stock sold to Lime Rock will be convertible into 14,202,146 shares of Allis-Chalmers common stock
at a conversion price of approximately $2.56 per share, subject to adjustment. The sale of
preferred stock yielded gross proceeds to Allis-Chalmers of approximately $36.4 million.
The aggregate gross proceeds of Allis-Chalmers rights offering to its stockholders, the sale
of common stock to Lime Rock through the backstop commitment, and the sale of convertible preferred
stock to Lime Rock were approximately $125.6 million. Allis-Chalmers intends to use the net
proceeds of the rights offering and sale of common stock to Lime Rock to repay indebtedness
outstanding under its bank credit facility and senior notes, and intends to use the net proceeds of
the sale of convertible preferred stock to Lime Rock to repay indebtedness and for general
Pursuant to its backstop commitment and preferred stock purchase commitment, Lime Rock has
acquired approximately 39.8% of Allis-Chalmers outstanding common stock on a pro forma basis, as
adjusted for the rights offering, the backstop commitment and the convertible preferred stock
purchase (counting the convertible preferred stock on an as converted basis). However, pursuant to
the terms of the agreements between Allis-Chalmers and Lime Rock, Lime Rocks total voting power
will not exceed 35% of the total voting power of Allis-Chalmers stockholders. Lime Rock has also
agreed, with certain exceptions, that for a period of three years it will not acquire any shares of
voting stock of Allis-Chalmers that would, when combined with shares of voting stock already owned
by Lime Rock, cause it to own more than 45% of
Allis-Chalmers common stock or more than 35% of the total voting power of Allis-Chalmers
RBC Capital Markets Corporation served as Allis-Chalmers financial advisor in connection with
the rights offering, backstop commitment and private placement of convertible preferred stock.
This press release
does not constitute an offer to sell, or the solicitation of an offer to
buy, any securities, and there will be no sale of any securities in any state in which such an
offer, solicitation, or sale would be unlawful prior to the registration of qualification of such
securities under the securities laws of any such state. The common stock and convertible preferred
stock sold to Lime Rock were not, and will not be, registered under the Securities Act of 1933, as
amended, and may not be offered or sold in the United States absent registration under such act or
the availability of an applicable exemption from the registration requirements of such act.
Allis-Chalmers Energy Inc. is a Houston-based multi-faceted oilfield services company.
Allis-Chalmers provide services and equipment to oil and natural gas exploration and production
companies, domestically primarily in Texas, Louisiana, New Mexico, Oklahoma, Arkansas, offshore in
the Gulf of Mexico, and internationally, primarily in Argentina, Brazil and Mexico. Allis-Chalmers
provides directional drilling services, casing and tubing services, underbalanced drilling,
production and workover services with coiled tubing units, rental of drill pipe and blow-out
prevention equipment, and international drilling and workover services. For more information, visit
Allis-Chalmers website at http://www.alchenergy.com.
This press release
contains forward-looking statements (within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934) regarding
Allis-Chalmers business, financial condition, results of operations and prospects. Words such as
expects, anticipates, intends, plans, believes, seeks, estimates and similar expressions or
variations of such words are intended to identify forward-looking statements, but are not the
exclusive means of identifying forward-looking statements in this press release
Although forward-looking statements in this press release
reflect the good faith judgment of
Allis-Chalmers management, such statements can only be based on facts and factors that
Allis-Chalmers management currently knows. Consequently, forward-looking statements are inherently
subject to risks and uncertainties, and actual results and outcomes may differ materially from the
results and outcomes discussed in the forward-looking statements. Factors that could cause or
contribute to such differences in results and outcomes include, but are not limited to, demand for
oil and natural gas drilling services in the areas and markets in which Allis-Chalmers operates,
competition, obsolescence of products and services, the ability to obtain financing to support
operations, environmental and other casualty risks, and the effect of government regulation.
Further information about the risks and uncertainties that may affect Allis-Chalmers business
are set forth in Allis-Chalmers most recent filing on Form 10-K (including, without limitation, in
the Risk Factors section) and in its other SEC filings and publicly available documents.
Allis-Chalmers urges readers not to place undue reliance on these forward-looking statements, which
speak only as of the date of this press release
. Allis-Chalmers undertakes no obligation to revise
or update any forward-looking statements in order to reflect any event or circumstance that may
arise after the date of this press release