Superior Well preferred holders claim merger triggers share repurchase

By Caroline Salls

Pittsburgh, Sept. 9 - A group of Superior Well Services, Inc. preferred shareholders filed a complaint Wednesday in the New York State Supreme Court, asking the court to rule that Superior will undergo a "fundamental change" under the share documents when Nabors Industries Ltd. acquires all of the company's outstanding shares.

Specifically, the preferred shareholders have asked the court to interpret the certificates of designation for Superior's 4% convertible preferred stock.

According to the complaint, Superior claims that the acquisition will not constitute a fundamental change, even though it will be entirely purchased by Nabors.

The shareholders said Superior is trying to avoid a certificate provision that entitles the preferred stockholders to sell the shares back to the company at the liquidation value of $1,000 per share plus accrued dividends.

The shareholders said a fundamental change occurs under the certificate of designation when a person or group becomes the direct or beneficial owner of common or other capital stock representing more than 50% of the company's voting power or when Superior completes a merger or consolidation.

The merger acquisition will be completed in two steps, according to the complaint.

Nabors will first launch a tender offer for all outstanding shares of Superior's common stock at a price of $22.12 per share in cash. Then, Nabors will acquire any remaining shares through a second-step merger at the tender price.

The tender offer launched on Aug. 11 and was expected to expire at midnight on Sept. 8.

The plaintiffs, which collectively are direct or beneficial holders of more than 72% of the preferred stock, include Whitebox Concentrated Convertible Arbitrage Partners, LP, Whitebox Multi-Strategy Partners, LP, IAM Mini-Fund 14 Ltd., HFR RVA Combined Master Trust, Silvercreek Convertible LP, Silvercreek Convertible Ltd., Silvercreek Capital LP, Investcorp Arbitrage Master Fund Ltd., CSS, LLC, AQR Absolute Return Master Account, LP, CNH Master Account, LP, AQR Delta Sapphire Fund, LP, AQR Delta Master Account, LP, AQR Opportunistic Premium Offshore Fund, LP and Basso Holdings Ltd.

Superior Well Services is an Indiana, Pa.-based provider of well-site services to oil and natural gas companies.

Nabors is a land drilling contractor based in Hamilton, Bermuda.

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