Precision Drilling says would rebid for Grey Wolf

By Michael Erman

NEW YORK (Reuters) - Canada's Precision Drilling Trust (PD_u.TO: Quote, Profile, Research) on Wednesday said it will immediately reapproach U.S. oil driller Grey Wolf Inc (GW.A: Quote, Profile, Research) with its $10-a-share takeover offer if Grey Wolf's shareholders vote down a proposed merger with Basic Energy Services Inc. (BAS.N: Quote, Profile, Research)

Grey Wolf rejected Precision Drilling's unsolicited offers to buy the company three times, saying the twice-sweetened $1.78 billion bid still undervalued the company. The Basic deal offers a better value for its shareholders, Grey Wolf said.

The company's investors are scheduled to vote on the deal on July 15. Grey Wolf plans to raise $275 million to finance the cash portion of its bid for Basic through a high-yield offering, but has postponed that offering until after the shareholder meeting, according to International Financing Review, a Thomson Reuters publication.

Two of the three most prominent proxy advisory firm -- RiskMetrics and Glass Lewis -- have recommended Grey Wolf shareholders vote against the proposed merger with Basic Energy.

"Grey Wolf shareholders may benefit from a full financial analysis of the Precision Drilling offer conducted by an independent adviser and from an extensive evaluation of strategic alternatives available to the company led by an independent committee of the board of directors," Glass Lewis analyst Jason McCandless said in a proxy paper obtained by Reuters on Wednesday.

But the third prominent proxy adviser, Proxy Governance Inc, and another proxy advisory service, Egan-Jones, said investors should support the Basic deal.

Shares of Grey Wolf closed 13 cents lower at $8.75 a share on the American Stock Exchange on Wednesday. Basic Energy shares rose 68 cents, or 2.4 percent, to $28.54.

(Reporting by Michael Erman; Editing by Braden Reddall, Leslie Gevirtz)