(NYSE: ACP)
(OTC Bulletin Board: NEGI)
MOUNT KISCO, N.Y. and DALLAS, Dec. 7 /PRNewswire-FirstCall/ -- American
Real Estate Partners, L.P. ("AREP") and National Energy Group, Inc. ("NEG")
today announced the signing of a merger agreement, pursuant to which NEG will
be merged into an affiliate of AREP Oil & Gas LLC. AREP Oil & Gas, which is a
wholly owned indirect subsidiary of AREP, is the owner of 50.1% of NEG's
common stock.
In July 2005, NEG's board of directors formed a Special Committee
consisting of an independent disinterested member to evaluate and make
recommendations with respect to the potential merger. The Special Committee
appointed Energy Spectrum Advisors, Inc. as its financial advisor and
Bracewell & Giuliani LLP as its legal counsel. Energy Spectrum delivered a
fairness opinion in connection with the Special Committee's evaluation of the
merger agreement. Following extensive review, the Special Committee
recommended to NEG's board of directors that the board approve the merger.
Following the adoption and approval of the agreement by the board of directors
of NEG, AREP Oil & Gas delivered to NEG a written consent approving the
agreement.
In the merger, the current holders of NEG common stock (including AREP Oil
& Gas) will receive shares of common stock of a new oil and gas company
("Newco"). The transaction, which is conditioned upon the consummation of an
initial public offering of common stock by Newco, will terminate if the
offering has not closed on or prior to December 1, 2006.
Giving effect to the merger, but without taking into account the issuance
of Newco common stock in the offering, each of the holders of NEG common stock
(including AREP Oil & Gas) will receive shares in Newco representing, in the
aggregate, a 7.990% economic interest in the entire equity of a combination or
consolidation of entities which will include 100% of the equity interests in
each of NEG, AREP Oil & Gas, National Onshore LP (formerly TransTexas Gas
Corporation) and National Offshore LP (formerly Panaco, Inc.), including the
recently acquired Minden Field assets. The minority stockholders of NEG will
receive, in exchange for their NEG common stock, Newco common stock
representing 3.987% of such economic interest and AREP Oil & Gas will receive,
in exchange for its NEG common stock, Newco common stock representing the
remaining 4.003% economic interest.
The public offering of Newco shares will result in the proportionate
reduction of the economic interests to be received by NEG stockholders as a
result of the merger. The economic interests to be received by NEG
stockholders as a result of the merger are based on the assumption that the
combined or consolidated entities will have net indebtedness of approximately
$500 million at the time of the merger and are subject to adjustment to the
extent that the actual amount of net indebtedness at such time is less than or
greater than $500 million.
National Onshore LP and National Offshore LP are currently wholly owned
subsidiaries of AREP Oil & Gas that are engaged in the exploration, production
and transmission of oil and gas in the continental United States and the Gulf
of Mexico.
The preceding is a brief summary of certain provisions of the merger
agreement, the full text of which is being filed with the SEC as an exhibit to
Form 8-K filings by AREP and NEG. Reference is made to such filings for a
more detailed description of the transactions.
This announcement shall not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be any sale of
any securities in any state or jurisdiction in which the offer, solicitation
or sale of securities would be unlawful. Any offers, solicitations of offers
to buy, or any sales of securities will only be made in accordance with the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"), or an exemption there from. This announcement is being
issued pursuant to and in accordance with Rule 135 under the Securities Act.
American Real Estate Partners, L.P., a master limited partnership, is a
diversified holding company engaged in a variety of businesses. AREP's
businesses currently include home fashion; gaming; oil and gas exploration and
production; and real estate.
National Energy Group, Inc. is a Dallas, Texas based company.
This release contains certain "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995, many of which
are beyond our ability to control or predict. Forward-looking statements may
be identified by words such as "expects," "anticipates," "intends," "plans,"
"believes," "seeks," "estimates," "will," or words of similar meaning and
include, but are not limited to, statements about the expected future business
and financial performance of AREP and its subsidiaries. Among these risks and
uncertainties are risks related to our home fashion operations, including
changes in the availability and price of raw materials, changes in customer
preferences and changes in transportation costs and delivery times; risks
related to our casino gaming and associated hotel, restaurant and
entertainment operations, including the effects of regulation, substantial
competition, rising operating costs and economic downturns; risks related to
oil and gas exploration and production operations, including costs of
drilling, completing and operating wells and the effects of regulation; risks
related to our real estate activities including the extent of any tenant
bankruptcies and insolvencies, our ability to maintain tenant occupancy at
current levels, our ability to obtain, at reasonable costs, adequate insurance
coverage, competition for investment properties, and other risks and
uncertainties detailed from time to time in our filings with the SEC. We
undertake no obligation to publicly update or review any forward-looking
information, whether as a result of new information, future developments or
otherwise.
This press release may contain projections and other forward-looking
statements within the meaning of Section 21E of the Securities Exchange Act of
1934, as amended. Any such projections or statements reflect NEG's current
views with respect to future events and financial performance. No assurances
can be given, however, that these events will occur or that such projections
will be achieved and actual results could differ materially from those
projected. A discussion of important factors that could cause actual results
to differ materially from those projected is included in NEG's periodic
reports filed with the Securities and Exchange Commission.
SOURCE National Energy Group, Inc.
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Related links:
http://www.negx.com
CONTACT:
Philip Devlin, Vice President and General
Counsel of National Energy Group, Inc., +1-214-692-9211, ext. 162
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