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EXHIBIT (a)(7)
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell Shares (as defined below). The Offer (as defined below) is made
solely by the Offer to Purchase dated January 8, 2001 and the related Letter of
Transmittal (and any amendments or supplements thereto) and is not being made to
(nor will tenders be accepted from or on behalf of) holders of Shares in any
jurisdiction in which the making of the Offer or the acceptance thereof would
not be in compliance with the laws of such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED COMMON SHARE PURCHASE RIGHTS)
OF
PENNACO ENERGY, INC.
AT
$19.00 NET PER SHARE
BY
MARATHON OIL ACQUISITION 1, LTD.
A WHOLLY OWNED SUBSIDIARY OF
MARATHON OIL COMPANY
A WHOLLY OWNED SUBSIDIARY OF
USX CORPORATION
Marathon Oil Acquisition 1, Ltd., a Delaware corporation (the "Purchaser")
and a wholly owned subsidiary of Marathon Oil Company, an Ohio corporation
("Marathon") and a wholly owned subsidiary of USX Corporation, a Delaware
corporation ("USX"), is offering to purchase all outstanding shares of common
stock, par value $.001 per share (the "Shares"), of Pennaco Energy, Inc., a
Delaware corporation ("Pennaco"), together with the associated common share
purchase rights (the "Rights") issued pursuant to the Rights Agreement dated as
of February 24, 1999, as amended as of December 22, 2000, between Pennaco and
Computershare Investor Services, L.L.C., as Rights Agent, at a purchase price of
$19.00 per Share, net to the seller in cash, without interest thereon, upon the
terms and subject to the conditions set forth in the Offer to Purchase dated
January 8, 2001 and in the related Letter of Transmittal (which, together with
any amendments or supplements thereto, collectively constitute the "Offer").
Unless the context otherwise requires, all references herein to Shares shall
include the Rights. The purpose of the Offer is to acquire for cash as many
outstanding Shares as possible as a first step in acquiring the entire equity
interest in Pennaco. Following the consummation of the Offer, the Purchaser
intends to effect the Merger (as defined below).
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON MONDAY, FEBRUARY 5, 2001, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED ON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A
NUMBER OF SHARES THAT WOULD CONSTITUTE AT LEAST A MAJORITY OF ALL OUTSTANDING
SHARES ON A FULLY DILUTED BASIS ON THE DATE OF PURCHASE. CERTAIN OTHER
CONDITIONS TO THE OFFER ARE DESCRIBED IN SECTION 14 OF THE OFFER TO PURCHASE.
The Offer is being made pursuant to the terms of an Agreement and Plan of
Merger dated as of December 22, 2000 (the "Merger Agreement") among the
Purchaser, Marathon and Pennaco. The Merger Agreement provides
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that, following the consummation of the Offer and on the terms and subject to
the conditions of the Merger Agreement and in accordance with the General
Corporation Law of the State of Delaware, the Purchaser will be merged with and
into Pennaco. Following the effective time of the Merger (the "Effective Time"),
Pennaco will continue as the surviving corporation and a wholly owned subsidiary
of Marathon. In the Merger, each outstanding Share (other than Shares owned by
Pennaco, the Purchaser or Marathon or by stockholders, if any, who are entitled
to and properly exercise appraisal rights under Delaware law) will be converted
into the right to receive the price per Share paid pursuant to the Offer in
cash, without interest thereon. The Merger Agreement is more fully described in
Section 12 of the Offer to Purchase. Under Delaware law, if the Purchaser
acquires at least 90% of the issued and outstanding Shares, pursuant to the
Offer or otherwise, the Purchaser will be able to effect the Merger without
prior notice to, or any action by, Pennaco's other stockholders. If, however,
the Purchaser does not acquire at least 90% of the outstanding Shares, pursuant
to the Offer or otherwise, and adoption of the Merger Agreement by Pennaco's
stockholders is required under Delaware law to effect the Merger, a longer
period of time will be required to effect the Merger as described in Section 12
of the Offer to Purchase.
THE BOARD OF DIRECTORS OF PENNACO HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT, INCLUDING
THE OFFER AND THE MERGER, AND UNANIMOUSLY DETERMINED THAT THE TERMS OF THE
OFFER, THE MERGER AND THE OTHER TRANSACTIONS CONTEMPLATED BY THE MERGER
AGREEMENT ARE ADVISABLE AND FAIR TO AND IN THE BEST INTERESTS OF PENNACO AND ITS
STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS OF PENNACO ACCEPT
THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
Tendering stockholders whose Shares are registered in their own names and
who tender directly to The Bank of New York, as Depositary (the "Depositary"),
will not be obligated to pay brokerage fees or commissions or, except as set
forth in Instruction 6 of the Letter of Transmittal, stock transfer taxes on the
purchase of Shares by the Purchaser pursuant to the Offer. Stockholders who hold
their Shares through banks or brokers should check with those institutions as to
whether they charge any service fees. The Purchaser will pay all fees and
expenses of the Depositary and Georgeson Shareholder Communications Inc., which
is acting as the Information Agent, incurred in connection with the Offer.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares validly tendered and not properly
withdrawn as, if and when the Purchaser gives oral or written notice to the
Depositary of the Purchaser's acceptance for payment of such Shares. On the
terms and subject to the conditions of the Offer, payment for Shares accepted
for payment pursuant to the Offer will be made by deposit of the purchase price
therefor with the Depositary. The Depositary will act as agent for tendering
stockholders for the purpose of receiving payment from the Purchaser and
transmitting payment to tendering stockholders whose Shares have been accepted
for payment. In all cases, payment for Shares accepted for payment pursuant to
the Offer will be made only after timely receipt by the Depositary of (1) the
certificates for such Shares or timely confirmation of book-entry transfer of
such Shares into the Depositary's account at the Book-Entry Transfer Facility
(as defined in the Offer to Purchase) pursuant to the procedures set forth in
Section 2 of the Offer to Purchase, (2) a Letter of Transmittal (or a facsimile
thereof), properly completed and duly executed, with any required signature
guarantees or, in the case of a book-entry transfer, an Agent's Message (as
defined in the Offer to Purchase) and (3) any other documents required by the
Letter of Transmittal. Under no circumstances will interest be paid on the
purchase price of the Shares to be paid by the Purchaser, regardless of any
extension of or amendment to the Offer or any delay in paying for such Shares.
The term "Expiration Date" means 12:00 midnight, New York City time, on
Monday, February 5, 2001, unless and until the Purchaser shall have extended the
period of time during which the Offer is open in accordance with the provisions
of the Merger Agreement, in which event the term "Expiration Date" shall mean
the latest time and date as of which the Offer, as so extended by the Purchaser,
will expire. Subject to the terms of the Merger Agreement (which prohibits
certain amendments to the Offer) and the applicable rules and regulations of the
Securities and Exchange Commission, the Purchaser reserves the right (but shall
not be obligated, except as described in Section 1 of the Offer to Purchase), at
any time and from time to time, and regardless of whether or not any of the
events or facts set forth in Section 14 of the Offer to Purchase shall have
occurred, (1) to extend the period of time during which the Offer is open, and
thereby delay acceptance for payment of and the payment for any Shares, by
giving oral or written notice of such extension to the Depositary, (2) to elect
to provide a subsequent offering period for the Offer in accordance with Rule
14d-11 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and (3) to amend the Offer in any other respect by giving oral or written
notice of such amendment to the Depositary. Under no circumstances will interest
be paid on the purchase price for tendered Shares, whether or not the Purchaser
exercises its right to extend the Offer. Any such extension will be followed by
a public announcement thereof no later than 9:00 A.M., New York City time, on
the next business day after the
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previously scheduled Expiration Date. During any such extension, all Shares
previously tendered and not withdrawn will remain subject to the Offer, subject
to the right of a tendering stockholder to withdraw such stockholder's Shares
pursuant to the withdrawal procedures described below.
Except as otherwise described below, tenders of Shares are irrevocable.
Shares tendered pursuant to the Offer may be withdrawn pursuant to the
procedures described below at any time prior to the Expiration Date and, unless
theretofore accepted for payment and paid for by the Purchaser pursuant to the
Offer, may also be withdrawn at any time after March 8, 2001. In order for a
withdrawal to be effective, a written or facsimile transmission notice of
withdrawal must be timely received by the Depositary at one of its addresses set
forth on the back cover of the Offer to Purchase. Any such notice must specify
the name of the person having tendered the Shares to be withdrawn, the number of
Shares to be withdrawn and the name of the registered holder of the Shares to be
withdrawn, if different from the name of the person who tendered the Shares. If
certificates for Shares have been delivered or otherwise identified to the
Depositary, then, prior to the physical release of such certificates, the serial
numbers shown on such certificates must be submitted to the Depositary and,
unless such Shares have been tendered by an Eligible Institution (as defined in
Section 2 of the Offer to Purchase), the signatures on the notice of withdrawal
must be guaranteed by an Eligible Institution. If Shares have been delivered
pursuant to the procedures for book-entry transfer set forth in Section 2 of the
Offer to Purchase, any notice of withdrawal must also specify the name and
number of the account at the Book-Entry Transfer Facility to be credited with
the withdrawn Shares and otherwise comply with the Book-Entry Transfer
Facility's procedures. Withdrawals of tenders of Shares may not be rescinded,
and any Shares properly withdrawn will thereafter be deemed not validly tendered
for purposes of the Offer. However, withdrawn Shares may be retendered by again
following one of the procedures described in Section 2 of the Offer to Purchase
at any time prior to the Expiration Date. All questions as to the form and
validity (including time of receipt) of any notice of withdrawal will be
determined by the Purchaser in its sole discretion, which determination will be
final and binding. None of the Purchaser, Marathon, USX, Pennaco, the
Depositary, the Information Agent or any other person will be under any duty to
give notification of any defects or irregularities in any notice of withdrawal
or incur any liability for failure to give any such notification.
Pursuant to Rule 14d-11 under the Exchange Act, the Purchaser may, subject
to certain conditions, provide a subsequent offering period from three to 20
business days in length following the Expiration Date. A subsequent offering
period would be an additional period of time, following the expiration of the
Offer and the purchase of Shares in the Offer, during which stockholders may
tender Shares not tendered in the Offer. A subsequent offering period, if one is
provided, is not an extension of the Offer, which already will have been
completed. If the Purchaser has acquired a majority but less than 90% of the
Shares as of the Expiration Date, it currently intends to elect to provide a
subsequent offering period. Under the Exchange Act, no withdrawal rights apply
to Shares tendered during a subsequent offering period and no withdrawal rights
apply during the subsequent offering period with respect to Shares tendered in
the Offer and accepted for payment. See Section 1 of the Offer to Purchase.
Pennaco has provided the Purchaser with Pennaco's stockholder lists and
security position listing for the purpose of disseminating the Offer to holders
of Shares. The Offer to Purchase, the related Letter of Transmittal and other
relevant materials will be mailed to record holders of Shares and furnished to
brokers, dealers, commercial banks, trust companies and similar persons whose
names, or the names of whose nominees, appear on Pennaco's stockholder lists or,
if applicable, who are listed as participants in a clearing agency's security
position listing for subsequent transmittal to beneficial owners of Shares.
The receipt of cash in exchange for Shares pursuant to the Offer or the
Merger will be a taxable transaction for U.S. federal income tax purposes and
may also be a taxable transaction under applicable state, local or foreign tax
laws. In general, a stockholder who receives cash in exchange for Shares
pursuant to the Offer or the Merger will recognize gain or loss for U.S. federal
income tax purposes equal to the difference, if any, between the amount of cash
received and such stockholder's adjusted tax basis in the Shares exchanged
therefor. Provided that such Shares constitute capital assets in the hands of
the stockholder, such gain or loss will be capital gain or loss, and will be
long-term capital gain or loss if the holder has held the Shares for more than
one year. The maximum U.S. federal income tax rate applicable to individual
taxpayers on long-term capital gains is 20%, and the deductibility of capital
losses is subject to limitations. All stockholders should consult with their own
tax advisors as to the particular tax consequences of the Offer and the Merger
to them, including the applicability and effect of the alternative minimum tax
and state, local or foreign income and other tax laws and of changes in such tax
laws. For a more complete description of certain U.S. federal income tax
consequences of the Offer and the Merger, see Section 5 of the Offer to
Purchase.
The Purchaser expressly reserves the right to waive any condition to the
Offer or modify the terms of the Offer, subject to (1) the terms of the Merger
Agreement, which contain certain conditions that may not be waived and
modifications that may not be made without the consent of Pennaco, and (2) the
rules and regulations of the Securities and Exchange Commission.
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The information required to be disclosed by Rule 14d-6(d)(1) under the
Exchange Act is contained in the Offer to Purchase and is incorporated herein by
reference.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ CAREFULLY AND IN THEIR ENTIRETY BEFORE
ANY DECISION IS MADE WITH RESPECT TO THE OFFER.
Requests for copies of the Offer to Purchase, the Letter of Transmittal
and other tender offer materials may be directed to the Information Agent as set
forth below, and copies will be furnished promptly at the Purchaser's expense.
None of the Purchaser, Marathon or USX will pay any fees or commissions to any
broker, dealer or other person (other than the Information Agent and the
Depositary, as described in the Offer to Purchase) in connection with the
solicitation of tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
GEORGESON
SHAREHOLDER
COMMUNICATIONS INC.
17 State Street, 10th Floor
New York, New York 10004
Banks and Brokers call collect: (212) 440-9800
All others call toll-free: (800) 223-2064
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