The JK Acquisition warrants, which started the day at $.23, have traded as high as $.55 on news that the company has settled its litigation with Multi-Shot and signed an amended merger agreement.
JK Acquisition Corp. and Multi-Shot, LLC Settle Lawsuit and Enter into Second Amended and Restated Agreement and Plan of Merger
Tuesday August 28, 8:15 am ET
HOUSTON--(BUSINESS WIRE)--JK Acquisition Corp. (AMEX: JKA - News, JKA-U - News, JKA-WS - News) announced today it has entered into a Settlement Agreement with Multi-Shot, LLC ("Multi-Shot") to resolve the lawsuit between the two companies and entered into a Second Amended and Restated Agreement and Plan of Merger ("Amended Merger Agreement") pursuant to which it will merge with privately held Multi-Shot, a leading independent directional drilling services company with an established presence in most major producing onshore oil and gas basins in the United States. The Amended Merger Agreement fully amends and restates the First Amended and Restated Agreement and Plan of Merger (the "Merger Agreement") which JK Acquisition Corp. and Multi-Shot entered into on February 14, 2007.
Among other things, the Amended Merger Agreement modifies the merger deadline of July 31, 2007 set forth in the Merger Agreement to require (1) the definitive proxy materials to be mailed to JK Acquisition Corp. shareholders by no later than December 31, 2007, and (2) the contemplated merger to be completed by no later than January 31, 2008. The Amended Merger Agreement provides that it will automatically terminate if either (1) or (2) above is not completed by the required date.
The Settlement Agreement
Pursuant to the Settlement Agreement, JK Acquisition Corp., Multi-Shot and other parties to the Settlement Agreement have agreed to waive any prior claims any of the parties have, or may have had against any and all of the parties to the Settlement Agreement in exchange for, among other consideration, JK Acquisition Corp. and Multi-Shot entering into the Amended Merger Agreement.
The Transaction
JK Acquisition Corp. intends to combine with Multi-Shot through the merger of Multi-Shot with and into Multi-Shot, Inc., a wholly-owned subsidiary of JK Acquisition Corp., in a transaction valued at an estimated $197,500,000. Assuming that estimated value is the actual value at closing, the members of Multi-Shot, will receive as consideration:
-- $20,000,000 in cash;
-- 21,759,259 shares of JK Acquisition Corp. common stock;
28,516,668 warrants for JK Acquisition Corp. common stock either pursuant to the grant of an Contingency Award (as defined in the Amended Merger Agreement) or, in certain circumstances at the election of the warrant holder, for cash consideration of $5.00 per share;
-- the assumption of approximately $60,000,000 in certain third-party indebtedness, $15,000,000 of which must be repaid at the closing of the contemplated merger; and
-- the cancellation of 2,458,334 shares of JK Acquisition Corp common stock owned by the current officers and directors of JK Acquisition Corp.
Upon the consummation of the merger, JK Acquisition Corp. anticipates the members of Multi-Shot will own approximately 60.75% of the outstanding shares of common stock of JK Acquisition Corp. (assuming no JK Acquisition Corp. shareholders elect to convert their shares to cash).
Closing of the merger is subject to various conditions, including the approval of the Amended Merger Agreement by the stockholders of JK Acquisition Corp. and the Members of Multi-Shot. The majority of the shares voted by JK Acquisition Corp. stockholders must be voted in favor of the proposed merger for the transaction to be approved. In addition, the closing is conditioned on holders of not more than 20% of the shares of JK Acquisition Corp. voting against the merger and electing to convert their JK Acquisition Corp. shares into cash.
Jim Wilson, CEO of JK Acquisition Corp., and Allen Neel, President of Multi-Shot, jointly remarked that: "Both companies are pleased with the execution of the Settlement Agreement and the Amended Merger Agreement and look forward to working towards finalizing this business combination in a timely manner. Furthermore, Multi-Shot and JKA remain enthusiastic about the business prospects resulting from the successful completion of the merger. Multi-Shot and JK Acquisition Corp. will work together closely pending the anticipated consummation of the merger." Mr. Wilson further stated: "We are pleased to announce the extension of our merger agreement with Multi-Shot with the execution of the Amended Merger Agreement. Multi-Shot, based on its audited 2006 financial results and its unaudited results through June 30, 2007, has materially exceeded the revenue and EBITDA levels projected at the time of the signing of the initial merger agreement in September 2006. The combination of the previously contemplated private recapitalization, the July 2007 acquisition by Multi-Shot of the assets of Ulterra MWD, LLP, the agreement by Multi-Shot's members to accept in excess of 80% of their merger consideration in JKA equity securities, and JK Acquisition Corp.'s anticipated cash position upon closing of the merger will provide for a materially strengthened post-merger balance sheet to serve as a platform for future growth."
Additional information about the transaction and Multi-Shot, LLC can be found in JK Acquisition Corp.'s Current Reports on Form 8-K filed with the Securities and Exchange Commission on September 7, 2006 and February 15, 2007 JK Acquisition Corp. anticipates that it will file a Current Report on Form 8-K regarding the Amended Merger Agreement on or before August 31, 2007 that contains additional disclosure regarding the Amended Merger Agreement.
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