Allis-Chalmers Energy Inc. Board Under Investor Investigation

If you are a current investor in Allis-Chalmers Energy Inc. (NYSE:ALY), and/or have information relating the investigation, you have certain options and you should contact the Shareholders Foundation, Inc.

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Company Name(s): 
Allis-Chalmers Energy
Affected Securities: 

Only hours after Allis-Chalmers Energy Inc. announced its takeover by Seawell Limited an investigation on behalf of investors of Allis-Chalmers Energy Inc. (NYSE:ALY) was announced.

Allis-Chalmers Energy Inc., located in Houston, Texas, provides services and equipment to oil and natural gas exploration and production companies throughout the Unites States, including Texas, Louisiana, Arkansas, Pennsylvania, Oklahoma, New Mexico, offshore in the Gulf of Mexico, and globally primarily in Argentina, Brazil, Bolivia and Mexico. While Allis-Chalmers Energy Inc. reported over the past years a relatively consistent Renvenue, like $570.97million in 2007, $675.95million in 2008, and $506.25million in 2009, its Net Income decreased from $50.44million in 2007, to a Net Loss of $39.46million in 2008, and $21.19million Net Loss in 2009.

On Friday, August 13, 2010, Allis-Chalmers Energy Inc. (NYSE:ALY) and Seawell Limited (NOTC:SEAW) announced that a definitive merger agreement under which Seawell will acquire Allis-Chalmers in a transaction valued at approximately USD 890 million (including assumed debt). ALY stockholders will have the right to elect USD 4.25 in cash or 1.15 Seawell common shares SEAW for each share of Allis-Chalmers common stock (ALY) they hold, subject to proration if more than 35% of the shares elect to receive cash.

According to Allis-Chalmers Energy Inc its Board of Directors has approved the merger agreement and the offer represents the implied acquisition price represents a 28% premium to Allis-Chalmers' six month average stock price based on the closing price of the Seawell common shares on the NOTC on August 12, 2010, and a 77% premium over Allis-Chalmers Energy Inc stock price on August 12, 2010.

Shares of Allis-Chalmers Energy Inc. (NYSE:ALY) traded before the announcement at $2.27 per share and jumped in response of the takeover news to $3.72 per share.
But ALY shares traded as high as $3.92 per share as early as May 10, 2010, and as high as $4.20 per share as early as April 29, 2010. At least one analyst set a price target for Allis-Chalmers stock at $7.00 per share, and ALY shares are down from its52weekHigh of $4.94 per share, and traded during 2008 as high as $18.30 per share, and during 2007 as high as $26.67 per share.

The investigation by a law firm “concerns whether Seawell Limited, as well as the directors of Allis-Chalmers Energy breached their fiduciary duties by not acting in Allis-Chalmers Energy (NYSE:ALY) shareholders' best interests in connection with the sale process of Allis-Chalmers Energy Inc, whether the Allis-Chalmers Board of Directors breached their fiduciary duty to Allis-Chalmers stockholders by failing to adequately shop the Company prior to entering into the agreement, whether the Board of Directors breach their fiduciary duties by not seeking a deal that will provide better value for Allis-Chalmers Energy Inc. , and whether Seawell Limited is underpaying for Allis-Chalmers Energy Inc. (ALY), thus unlawfully harming ALY stockholders.”