Superior Drilling Products Announces Preliminary Results for Election of Form of Merger Consideration
VERNAL, Utah--(BUSINESS WIRE)--July 30, 2024--
Superior Drilling Products, Inc. (NYSE American: SDPI) ("SDPI") announced today the preliminary results of the elections made by holders of SDPI common stock regarding the form of merger consideration to be received in connection with the pending acquisition of SDPI (the "Transaction") of Drilling Tools International Corporation $(DTI)$ ("DTI").
On July 29, 2024, the shareholders of SDPI approved the transactions contemplated by the Agreement and Plan of Merger entered into on March 6, 2024 among DTI, SDPI, DTI Merger Sub I, Inc., a Delaware corporation and direct wholly owned subsidiary of DTI ("Merger Sub I"), and DTI Merger Sub II, LLC, a Delaware limited liability company and direct wholly owned subsidiary of DTI ("Merger Sub II"), pursuant to which, among other things, and upon the terms and subject to the conditions set forth in the Merger Agreement, (a) Merger Sub I will merge with and into SDPI (the "First Merger"), with SDPI surviving as a wholly owned subsidiary of DTI, and (b) upon the effective time of the First Merger (the "First Effective Time"), SDPI, as the surviving corporation of the First Merger, will merge with and into Merger Sub II (the "Second Merger, " and, together with the First Merger, the "Merger"), with Merger Sub II surviving as a wholly owned subsidiary of DTI.
Pursuant to the Merger Agreement, at the First Effective Time, each share of SDPI common stock, par value $0.001 per share (the "SDPI Common Stock"), issued and outstanding immediately prior to the First Effective Time was converted into the right to receive, without interest, at the election of the holder thereof, subject to the proration provisions of the Merger Agreement, (a) for each share of SDPI Common Stock with respect to which an election to receive cash had been made and not revoked or lost (a "Cash Election Share"), $1.00 in cash (the "Cash Election Consideration"), (b) for each share of SDPI Common Stock with respect to which an election to receive stock had been made and not revoked or lost (each, a "Stock Election Share"), 0.313 validly issued, fully paid, and non-assessable shares of common stock, par value $0.0001 per share (the "DTI Common Stock"), of DTI (the "Stock Election Consideration," and together with the Cash Election Consideration, the "Merger Consideration"), and (c) for each share of SDPI Common Stock with respect to which no election to receive Cash Election Consideration or the Stock Election Consideration had been made (a "No Election Share"), the Cash Election Consideration or the Stock Election Consideration, as provided in the proration mechanics described below.
Pursuant to the terms of the Merger Agreement, (a) if the product obtained by multiplying the aggregate number of Stock Election Shares by 0.313 (the "Stock Election Multiplier" and such product, the "Aggregate Stock Elections") exceeded 4,845,240 (the "Maximum Share Amount"), (i) all Cash Election Shares and No Election Shares were to be exchanged for the Cash Election Consideration, and (ii) a portion of the Stock Election Shares of each holder thereof was to be exchanged for the Stock Election Consideration, with such portion being equal to the product obtained by multiplying the number of such holder's Stock Election Shares by a fraction, the numerator of which is the Maximum Share Amount and the denominator of which is the Aggregate Stock Elections, with the remaining portion of such holder's Stock Election Shares being exchanged for the Cash Election Consideration, (b) if the Aggregate Stock Elections was less than 4,112,752 (the "Minimum Share Amount" and the difference between the Minimum Share Amount and the Aggregate Stock Elections, the "Shortfall Amount"), then (i) first, if the Shortfall Amount is smaller than or equal to the number of No Election Shares multiplied by 0.313 (the "No Election Share Amount"), then: $(A)$ the Cash Election Shares were to be received in cash as they have elected and will not be affected by the adjustment; and $(B)$ the No Election Shares held by shareholders were to be exchanged for the Stock Election Consideration equal to the product of (1) the number of No Election Shares of such holder and (2) a fraction, the numerator of which is the Shortfall Amount and the denominator of which is the No Election Share Amount, with the remaining portion of such holder's No Election Shares receiving the Cash Election Consideration, and (ii) second, if the Shortfall Amount exceeded the No Election Share Amount, then $(Y)$ all No Election Shares were to be exchanged for the Stock Election Consideration and $(Z)$ the Cash Election Shares held by stockholders were to be exchanged for the Stock Election Consideration, with such portion being equal to the product of (x) the number of Cash Election Shares of such holder and (y) a fraction, the numerator of which is the amount by which the Shortfall Amount exceeded the No Election Share Amount, and the denominator of which is the product of the aggregate number of Cash Election Shares and the Stock Election Multiplier, with the remaining portion of such holder's Cash Election Shares receiving the Cash Election Consideration, and (iii) if the Aggregate Stock Elections is (x) equal to the Maximum Share Amount, (y) less than the Maximum Share Amount but greater than the Minimum Share Amount, or (z) equal to the Minimum Share Amount, then (1) all Cash Election Shares and No Election Shares were to be exchanged for the Cash Election Consideration and (2) all Stock Election Shares will be exchanged for the Stock Election Consideration.
Based on available information as of the election deadline of 5:00 p.m., New York time, on July 29, 2024, the preliminary merger consideration election results were:
-- Holders of approximately 80.5% of the outstanding shares of SDPI Common
Stock, or 24,464,146 shares, elected to receive the Stock Election
Consideration.
-- Holders of approximately 5.3% of the outstanding shares of SDPI Common
Stock, or 1,605,736 shares, elected to receive the Cash Election
Consideration.
-- Holders of approximately 14.2% of the outstanding shares of SDPI Common
Stock, or 4,321,362 shares, made no election, and as a result, will
receive the Cash Election Consideration.
Because the Maximum Share Amount was exceeded, holders of SDPI Common Stock who elected to receive all Stock Election Consideration will receive a portion of their Merger Consideration in Cash Election Consideration.
The foregoing results are preliminary only, and final certified results are not expected to be available until shortly before closing. After the final results of the election process are determined, the final merger consideration, and the allocation of the merger consideration, will be calculated in accordance with the terms of the Merger Agreement. No fractional shares of DTI Common Stock will be issued in the merger, and holders of SDPI Common Stock will receive cash in lieu of any fractional shares of DTI Common Stock.
A more detailed description of the merger consideration and the proration procedures applicable to elections is contained in the definitive proxy statement/prospectus was sent to stockholders of SDPI on or about July 2, 2024. SDPI stockholders should carefully read the definitive proxy statement/prospectus in its entirety.
About Drilling Tools International Corporation
Drilling Tools International is a Houston, Texas based leading oilfield services company that manufactures and rents downhole drilling tools used in horizontal and directional drilling of oil and natural gas wells. With roots dating back to 1984, DTI operates from 16 service and support centers across North America and maintains 7 international service and support centers across Europe and the Middle East; and maintain a large fleet of rental equipment, with over 65,000 tools for use in horizontal and directional drilling, as well as surface control equipment. To learn more about DTI, visit www.drillingtools.com.
About Superior Drilling Products, Inc.
SDPI is an innovative, cutting-edge drilling tool technology company providing cost saving solutions that drive production efficiencies for the oil and natural gas drilling industry. The Company designs, manufactures, repairs, and sells drilling tools. SDPI drilling solutions include the patented Drill-N-Ream$(R)$ well bore conditioning tool and the patented Strider$(TM)$ oscillation system technology. In addition, SDP is a manufacturer and refurbisher of PDC (polycrystalline diamond compact) drill bits for leading oil field service companies. SDPI operates a state-of-the-art drilling tool fabrication facility, where it manufactures its solutions for the drilling industry, as well as customers' custom products. Additional information about SDPI can be found at: www.sdpi.com.
Additional Information for Superior Drilling Products, Inc. Shareholders and Where to Find It
This press release relates to a proposed acquisition of Superior Drilling Products, Inc. by Drilling Tools International Corporation. In connection with the transaction, DTI filed a registration statement on Form S-4 which includes a document that serves as a prospectus of DTI and a proxy statement of SDPI (the "proxy statement/prospectus"), and each party has filed and will file other relevant documents regarding the transaction with the Securities and Exchange Commission (the "SEC"). INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY, INCLUDING THE SCHEDULE 13E-3, BECAUSE THEY CONTAIN IMPORTANT INFORMATION. A definitive proxy statement/prospectus was sent to stockholders of SDPI on or about July 2, 2024. Investors and security holders can obtain free copies of the registration statement and the proxy statement/prospectus and other relevant documents filed with the SEC through the website maintained by the SEC at
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