ORANGE, Calif., Dec. 30 /PRNewswire-FirstCall/ -- United Fuel & Energy Corporation (Pink Sheets: UFEN) ("United Fuel"), a leading distributor of gasoline, diesel and lubricant products to customers in the southwestern and south central United States, today announced that on December 24, 2009, it entered into a definitive merger agreement with Southern Counties Oil Co., a California Limited Partnership ("SC Fuels"), and its wholly-owned acquisition subsidiary, Goldstream, Inc. ("Goldstream"). Under the merger agreement, Goldstream will commence a tender offer to purchase all of the outstanding shares of United Fuel's common stock not already owned by SC Fuels and its affiliates, at a purchase price of $0.30 per share, net to the seller in cash.
The $0.30 cash tender offer represents a premium of approximately 134% over United Fuel's average closing share price of $0.128 during the 30 trading days ended December 23, 2009, the day before United Fuel entered into the merger agreement.
"This is a great opportunity for United Fuel shareholders," said Frank Greinke, chairman and chief executive officer of United Fuel and President of Goldstream. "We believe United Fuel investors will see our tender offer as the best way to maximize the value of their investment in United Fuel."
A special committee, consisting of directors who were not interested in the transactions contemplated by the merger agreement (the "Special Committee") unanimously determined that the terms of the transactions contemplated under the merger agreement were in the best interests of the Company and its shareholders and recommended that the United Fuel's board of directors (the "Board") approve the transactions and recommend to the shareholders that they tender their shares. Matrix Capital Markets Group, Inc. acted as financial advisor to the Special Committee and delivered a fairness opinion to the Special Committee and the Board. The Board, with an interested director recusing himself from the vote, unanimously approved the merger agreement and resolved to recommend the transactions contemplated under the merger agreement to United Fuel's shareholders.
The merger is subject to the successful completion of the tender offer by Goldstream and customary closing conditions. Following the completion of the tender offer, United Fuel will be merged into Goldstream, and any remaining shares of United Fuel will be cancelled and converted into the right to receive $0.30 net cash per share. In addition, United Fuel may, subject to the terms of the merger agreement, respond to unsolicited proposals and negotiate with parties that submit competing proposals. If United Fuel accepts a superior proposal, a break-up fee would be payable by United Fuel to SC Fuels.
The tender offer is expected to commence within 10 business days of the date of execution of the merger agreement and will remain open for at least 20 business days, subject to extension under certain circumstances. The tender offer closing is conditioned upon SC Fuels and Goldstream being able to acquire at least a majority of the total number of shares of common stock of United Fuels outstanding on the date of the merger agreement other than those shares already owned by SC Fuels or its affiliates. The closing of the tender offer is also subject to other customary closing conditions.
Cox Smith Matthews Incorporated is acting as legal advisor for United Fuel and Fulbright & Jaworski L.L.P. is acting as legal advisor for the Special Committee. Rutan & Tucker, LLP is serving as legal advisor to SC Fuels.
The tender offer described in this release has not yet commenced, and this press release is neither an offer to purchase nor a solicitation of an offer to sell securities of United Fuel. The description of the tender offer contained in this press release is not intended to be a full or detailed description of the terms or conditions of the tender offer. At the time the tender offer is commenced, Goldstream will distribute to United Fuel shareholders tender offer materials (including an offer to purchase, letter of transmittal and related tender offer documents). In addition, United Fuel will distribute a Statement of Solicitation/Recommendation to all United Fuel shareholders recommending that all shareholders accept the terms of the tender offer and tender their shares. United Fuel shareholders are urged to read thoroughly these tender offer materials because they contain important information regarding the tender offer process.
About SC Fuels
SC Fuels is a California limited partnership that distributes petroleum products throughout the Western United States.
About United Fuel
United Fuel is engaged in the business of distributing gasoline, diesel and lubricant products primarily in certain markets of Texas, California, New Mexico, Arizona and Oklahoma. United Fuel represents the consolidation of numerous companies, the most significant of which are the Eddins-Walcher Company and Cardlock Fuels System. United Fuel currently engages in the following activities:
-- Card-lock operation (unattended re-fueling of commercial vehicles) -- Wholesale fuels and lubricants (to commercial customers)
For more information, please visit the Company's website at http://www.ufeonline.com/.
Safe Harbor Statement
Certain statements included in this press release may constitute forward-looking statements. Actual outcomes could differ materially from such statements expressed or implied herein as a result of a variety of factors including, but not limited to: (1) the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement; (2) the outcome of any legal proceedings that may be instituted against United Fuel and others following announcement of the merger agreement; and (3) the inability to complete the merger due to the failure to satisfy conditions to completion of the merger. The forward-looking statements contained herein are made only as of the date of this press release, and United Fuel does not undertake any obligation to publicly update such forward- looking statements to reflect subsequent events or circumstances.
Contact: Frank Greinke, Chairman and CEO fgreinke@ufeonline.com / 714-923-3010 Robert Bollar, General Counsel for SC Fuels bollarr@scfuels.com / 714-744-7140 Lisa Elliott / IR Counsel - DRG&E lelliott@drg-e.com / 713-529-6600
United Fuel & Energy Corporation
CONTACT: Frank Greinke, Chairman and CEO of United Fuel & Energy
Corporation, +1-714-923-3010, fgreinke@ufeonline.com; or Robert Bollar,
General Counsel for SC Fuels, +1-714-744-7140, bollarr@scfuels.com; or Lisa
Elliott, IR Counsel of DRG&E, +1-713-529-6600, lelliott@drg-e.com
Web Site: http://www.ufeonline.com/
