Wyoming
|
1094
|
83-0205516
|
State
or other jurisdiction of incorporation
|
Primary
Standard Industrial Classification Code Number
|
I.R.S.
Employer Identification Number
|
Copies
to:
|
Stephen
E. Rounds
|
The
Law Office of Stephen E. Rounds
|
|
1544
York Street, Suite 110, Denver, CO 80206
|
|
Tel: 303.377.6997;
Fax: 303.377.0231
Scot
Anderson and Ryan Arney
Davis
Graham & Stubbs LLP
1550
17th
Street, Suite 500, Denver, CO 80202
Tel.
303.892.9400; Fax 303.893.1379
|
Proposed
|
||||||||||||||||
Proposed
|
Maximum
|
|||||||||||||||
Amount
of
|
Maximum
|
Aggregate
|
||||||||||||||
Title
of Each
|
Securities
to
|
Offering
|
Dollar
Price
|
|||||||||||||
Class
|
be
Registered
|
Price
Per
|
of
Securities to
|
Amount
of
|
||||||||||||
of
Securities
|
in
Offering
|
Security
|
be
Registered
|
Fee
|
||||||||||||
Common
Stock
|
2,876,188
|
$ |
2.27
|
$ |
6,528,950
|
$ |
200.44
|
|||||||||
(1)
|
Pursuant
to rule 457(f)(1), the maximum aggregate offering price is based
on the
average of the high and low sales prices of Crested Corp. common
stock as
reported on OTCBB for the five trading days preceding September
17, 2007,
and computed based on the estimated maximum number of 2,876,188
shares of
U.S. Energy Corp. common stock that may be exchanged for the
Crested Corp.
common stock. The fee rate is $30.70 per million dollars of the
aggregate offering market price.
|
(2)
|
Represents
the maximum number of shares issuable by U.S. Energy Corp. upon
consummation of the merger with Crested Corp. U.S. Energy Corp.
shall be the surviving entity in the
merger.
|
·
|
a
proposal to adopt the Agreement and Plan of Merger, dated as
of January
23, 2007, and as amended on July 31, 2007, by and between Crested
Corp., a
Colorado corporation, and U.S. Energy Corp. (“USE”), a Wyoming
corporation; and
|
·
|
such
other business as may properly come before the special meeting
or any
adjournment or postponement
thereof.
|
1
|
|||
8
|
|||
Parties
to the Merger
|
8
|
||
U.S.
Energy Corp. – Selected Information
|
8
|
||
General
|
8
|
||
The
USECC Joint Venture
|
10
|
||
Recent
Significant Transactions
|
11
|
||
SXR
Uranium One – Uranium Assets
|
12
|
||
Kobex
Resources Ltd. – Molybdenum
|
13
|
||
Crested
Corp
|
13
|
||
Reasons
for the Merger and Crested’s Recommendation to Shareholders (page
78)
|
14
|
||
The
Merger (page 73)
|
14
|
||
Merger
Consideration (page 88)
|
15
|
||
Share
Information and Comparative Market Prices (pages 34-36)
|
15
|
||
Material
United States Federal Income Tax Consequences of the Merger
to
Crested
|
|
||
Shareholders
(page 98)
|
15
|
||
Opinion
of the Crested Financial Advisor (page 80)
|
16
|
||
Crested
Shareholders Have Dissenters’ Rights of Appraisal (page
96)
|
16
|
||
The
Voting Agreement (page 95)
|
16
|
||
Conditions
that Must Be Satisfied or Waived for the Merger to Occur (page
93)
|
16
|
||
Termination
of the Merger Agreement (page 94)
|
17
|
||
Crested’s
and USE’s Directors and Officers Have Financial Interests in the
Merger
|
|||
(page
89)
|
17
|
||
The
Rights of Crested Shareholders Will Be Governed by Different
Laws and
New
|
|||
Governing
Documents After the Merger (page 101)
|
17
|
||
Accounting
Treatment of the Merger by USE (page 98)
|
17
|
||
USE
Shareholder Approval Is Not Required
|
17
|
||
Regulatory
Requirements
|
18
|
||
Risk
Factors (page 19)
|
18
|
||
Restrictions
on the Ability to Sell USE Common Stock
|
18
|
||
Surrender
of Stock Certificates
|
18
|
||
The
Special Meeting of Crested Shareholders (page 70)
|
18
|
||
19
|
|||
Risks
Relating to the Merger
|
19
|
||
Risks
Relating to USE’s Business
|
21
|
||
Risks
Relating to USE Stock
|
24
|
||
26
|
|||
27
|
|||
CONSOLIDATED
FINANCIAL INFORMATION
|
30
|
||
34
|
|||
34
|
|||
Recent
Closing Prices
|
34
|
||
Historical
Market Price Data
|
35
|
||
Number
of Crested shareholders
|
36
|
||
37
|
|||
38
|
General
|
38
|
||
Recent
Significant Transactions
|
38
|
||
Properties
|
43
|
||
Other
Properties
|
46
|
||
Mining
Claim Holdings
|
47
|
||
Proposed
Federal Legislation
|
47
|
||
Legal
Proceedings
|
47
|
||
Research
and Development
|
49
|
||
Environmental
Regulations
|
50
|
||
Employees
|
50
|
||
Change
in Accountants
|
50
|
||
Crested’s
Management’s Discussion and Analysis of Financial Condition and Results
of
|
|||
Operations
for the Six Months Ended June 30, 2007 as compared to the Six
Months
|
52
|
||
Crested’s
Management’s Discussion and Analysis – Results of Operations for the Year
Ended
|
|||
December
21, 2006, 2005 and 2004
|
59
|
||
70
|
|||
Matters
to be Considered
|
70
|
||
Proxies
|
70
|
||
Shares
Subject to Voting Agreement
|
71
|
||
Solicitation
of Proxies; Expenses of Solicitation
|
71
|
||
Record
Date
|
71
|
||
Voting
Rights and Vote Required
|
71
|
||
Recommendation
of the Board of Directors
|
72
|
||
Interest
of Certain Matters to be Acted Upon
|
72
|
||
Attending
the Meeting
|
72
|
||
Revocation
of Proxies
|
72
|
||
Householding
|
73
|
||
Future
Crested Shareholder Proposals
|
73
|
||
73
|
|||
General
|
73
|
||
Structure
|
73
|
||
Background
of the Merger
|
74
|
||
History
of Communications between the Boards of Directors of the Companies
Regarding
|
|||
the
Merger
|
74
|
||
USE’s
Reasons for the Merger
|
77
|
||
Crested’s
Reasons for the Merger; Recommendation of Crested’s Board of
Directors
|
78
|
||
Opinion
of the Crested Financial Advisor – Neidiger, Tucker, Bruner,
Inc.
|
80
|
||
Opinion
of the USE Financial Advisor – Navigant Capital Advisors,
LLC
|
82
|
||
Summary
of Analyses Performed by Navigant
|
85
|
||
Decision
of USE’s Board of Directors
|
87
|
||
Board
of Directors and Management of USE Following the Merger
|
87
|
||
Distribution
of the Merger Consideration
|
88
|
||
Public
Trading Markets
|
88
|
||
USE
Dividends
|
88
|
Crested’s
and USE’s Directors and Officers Have Financial Interests in the
Merger
|
89
|
||
Indemnification
and Insurance
|
91
|
||
91
|
|||
Representations
and Warranties
|
91
|
||
Closing
and Effective Time of the Merger
|
91
|
||
No
Solicitation of Takeover Proposals
|
92
|
||
Conditions
to the Completion of the Merger
|
93
|
||
Conduct
of Business of Crested and USE Pending the Merger
|
94
|
||
Termination
and Termination Fees; Payment of Fees and Costs Generally
|
94
|
||
95
|
|||
96
|
|||
98
|
|||
MATERIAL
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF
THE
|
|||
MERGER
|
98
|
||
In
General
|
99
|
||
Tax
Consequences If the Merger Does Not Qualify as a Reorganization
Under
Section
|
|||
368(a)
of the Code
|
101
|
||
COMPARISON
OF
SHAREHOLDERS’ RIGHTS
|
101
|
||
General
|
101
|
||
Comparison
of Shareholders’ Rights
|
101
|
||
DESCRIPTION
OF USE SECURITIES
|
105
|
||
Common
Stock
|
105
|
||
Preferred
Stock
|
106
|
||
107
|
|||
108
|
|||
108
|
|||
110
|
|||
At
June 30, 2007 and 2006 and for the Three and Six Months Then
Ended
(Unaudited)
|
F-1
|
||
At
December 31, 2006 and for the Three Years Then Ended
(Audited)
|
F-14
|
|
Q:
|
Why
am I receiving this proxy
statement/prospectus?
|
|
A:
|
Crested
and USE have agreed to the acquisition of Crested by USE pursuant
to the
terms of a merger agreement, as amended, that is described in
this proxy
statement/prospectus. A copy of the merger agreement and the
amendment is attached to this proxy statement/prospectus as Appendix
A. In order to complete the merger, Crested shareholders
holding a majority of the outstanding Crested shares, excluding
the
Crested shares owned by USE, by its subsidiaries, and by its
officers and
directors, must adopt the merger agreement and the transactions
contemplated thereby. This proxy statement/prospectus contains
important information about the merger, the merger agreement
and the
special meeting, which you should read carefully. The enclosed
voting materials allow you to vote your shares without attending
the
special meeting. Your vote is
important. USE, its subsidiaries, its officers and
directors and Crested’s directors who own Crested shares, have entered
into a voting agreement with Crested, by which they have agreed
to vote
all of their shares of Crested common stock in line with the
vote of the
holders of a majority of the minority shares of Crested (i.e.,
all shares
not held by USE, by its subsidiaries, and by its officers and
directors),
with respect to adoption of the merger agreement. A copy of the
voting agreement is attached to this proxy statement/prospectus
as
Appendix B. At August 21, 2007 the minority Crested
shareholders hold approximately 29.9% of the outstanding shares
of
Crested. We encourage you to vote or tender your proxy as soon
as possible.
|
|
Q:
|
Why
is Crested proposing the
merger?
|
|
A:
|
Crested
is proposing to merge for several reasons, including the belief
of its
board of directors that the merger is the best strategic alternative
available for Crested. For more information, please see
“Crested’s Reasons for the Merger; Recommendation of Crested’s Board of
Directors.”
|
|
Q:
|
What
will happen in the merger?
|
|
A:
|
In
the merger, Crested will merge into USE. USE will continue
after the merger as the surviving entity, and Crested will cease
to
exist.
|
|
Q:
|
As
a Crested shareholder, what will I receive in the
merger?
|
|
A:
|
If
the merger is completed, for every 2 shares of Crested common
stock you
own, you will receive 1 share of USE common
stock.
|
|
Q:
|
Will
any of the officers, directors and employees of USE, or the independent
directors of Crested, receive Crested shares in the
merger?
|
|
A:
|
Yes. The
following table shows the number of Crested shares currently
owned
by USE officers and one retired USE officer as of
August 21, 2007. The table also shows the ownership of Crested
shares, if the merger with USE is successful, by (i) USE employees,
(ii)
USE officers, (iii) USE directors, (iv) a retired USE officer,
(v) Crested
directors, (vi) USE and (vii) USE consolidated
subsidiaries. Percentage ownership of each group mentioned
above is also shown before the merger and what it would be after
the
merger. Shares owned by USE employees, officers and directors
post merger include shares which would be issued on a cashless
exercise
basis for options held by those
individuals.
|
Shares
of Crested
|
Diluted
Number
|
|||||||||||||||||||||||
Shares
of Crested
|
Crested
|
from
Cashless
|
of
Shares
|
Basic
%
|
Diluted
%
|
|||||||||||||||||||
Directly
Owned
|
Options
|
Exercise
of Options
|
to
be Owned
|
Ownership
|
Ownership
|
|||||||||||||||||||
USE
Employees
|
-
|
330,000
|
86,769
|
86,769
|
0.0 | % | 0.5 | % | ||||||||||||||||
Officers
of USE
|
18,466
|
850,000
|
223,491
|
241,957
|
0.1 | % | 1.4 | % | ||||||||||||||||
Directors
of USE
|
90,000
|
23,664
|
23,664
|
0.0 | % | 0.1 | % | |||||||||||||||||
Retired
USE Officer
|
-
|
|||||||||||||||||||||||
and
Director
|
147,850
|
(1) |
230,000
|
(2) |
60,474
|
208,324
|
0.9 | % | 1.2 | % | ||||||||||||||
166,316
|
1,500,000
|
394,398
|
560,714
|
1.0 | % | 3.2 | % | |||||||||||||||||
Directors
of Crested
|
55,925
|
-
|
-
|
55,925
|
0.3 | % | 0.3 | % | ||||||||||||||||
Crested
shares owned by:
|
||||||||||||||||||||||||
USE
|
12,024,733
|
-
|
-
|
12,024,733
|
69.2 | % | 67.6 | % | ||||||||||||||||
Plateau
Resources, Ltd.
|
60,000
|
-
|
-
|
60,000
|
0.3 | % | 0.3 | % | ||||||||||||||||
Sutter
Gold Mining Inc.
|
100,000
|
-
|
-
|
100,000
|
0.6 | % | 0.6 | % | ||||||||||||||||
USE
Consolidated Ownership
|
12,184,733
|
-
|
-
|
12,184,733
|
70.1 | % | 68.5 | % | ||||||||||||||||
Total
USE, USE Subsidiary,
|
||||||||||||||||||||||||
Employees,
Officers and
|
||||||||||||||||||||||||
Directors
of Crested and USE
|
12,406,974
|
(3) |
1,500,000
|
394,398
|
12,801,372
|
71.4 | % | 72.0 | % | |||||||||||||||
(1)
Shares
directly owned by Daniel P. Svilar, retired USE and Crested General
Counsel.
|
||||||||||||||||||||||||
(2)
Includes
Daniel P. Svilar (200,000 options) who served as General Counsel
until
retirement at January 12, 2007 and Don Anderson (30,000
options)
|
||||||||||||||||||||||||
who
served as a Director until retirement on January 6, 2007.
|
||||||||||||||||||||||||
(3)
Subject to
Voting Agreement to be voted with majority of minority shareholders
of
Crested.
|
|
Q:
|
What
are the principal risks relating to the
merger?
|
|
A:
|
If
all of the conditions to the merger are not met, the merger will
not
occur. The merger agreement contains certain termination rights
for both USE and Crested which, if exercised, could result in
reimbursement to the other party of legal and advisory fees actually
incurred relating to the merger. These and other risks are
explained in the section entitled “Risk Factors—Risks Relating to the
Merger” beginning on page 19 of this proxy
statement/prospectus.
|
|
Q:
|
Can
the value of the transaction change between now and the time
the merger is
completed?
|
|
A:
|
Yes. The
value of the merger consideration (the USE shares) can
change. The exchange ratio is fixed, meaning that every 2
issued and outstanding shares of Crested’s common stock held by the
minority shareholders will be converted into the right to receive
1 USE
share, regardless of the trading price of USE common stock at
the
effective time of the merger. Because the market value of the
USE shares to be issued in the merger may increase or decrease
substantially as USE’s trading price fluctuates, the value you receive may
be worth more or less than it was when the merger agreement was
signed,
when you vote, when the merger is completed, or when you actually
receive
your shares. The future market price of USE shares is not
predicted.
|
|
Q:
|
When
and where will the special meeting take
place?
|
|
A:
|
The
Crested meeting will take place on ____________, 2007, at 877
N. 8th
W.,
Riverton, Wyoming 82501, at 10:00 am local
time.
|
|
Q:
|
Who
is entitled to vote at the special
meeting?
|
|
A:
|
Holders
of record of Crested shares as of the close of business on
October 10,
2007 (the record date), are entitled to vote at the
meeting. Each shareholder has one vote for each share of
Crested that the shareholder owns on the record
date.
|
|
Q:
|
What
vote is required to adopt the merger
agreement?
|
|
A:
|
The
affirmative vote of the holders of a majority of Crested shares
is
required to adopt the merger agreement. The following table
shows how we have calculated the vote required to approve the
merger. Because the Crested options will not be exercised until
after all Crested shareholders vote at the meeting, the shares
underlying
the Crested options are not shown in the
table.
|
Number
of Crested shares
|
||||
Outstanding
at August 21, 2007
|
17,382,704
|
|||
Deduct
shares owned by:
|
||||
U.S.
Energy Corp.
|
12,024,733
|
|||
USE
Officers
|
18,466
|
|||
Retired
USE Officer
|
147,850
|
|||
Crested
Directors
|
55,925
|
|||
Plateau
Resources, Ltd.
|
60,000
|
|||
Sutter
Gold Mining Company
|
100,000
|
|||
12,406,974
|
||||
Crested
shares owned by minority
|
||||
shareholders
|
4,975,730
|
|||
Majority
of Crested Minority Shareholders
|
2,487,866
|
|||
|
Q:
|
How
does the Crested board of directors recommend that Crested shareholders
vote?
|
|
A:
|
The
Crested board of directors unanimously recommended that Crested
shareholders vote “FOR” the adoption of the merger
agreement. The two Crested shares for one USE share exchange
ratio was negotiated between special committees of independent
directors
of the boards of Crested and USE, and approved by the full boards
of
directors of both companies.
|
|
Q:
|
Did
the Crested and USE Boards receive opinions from financial
advisors?
|
A.
|
Yes. Neidiger,
Tucker, Bruner, Inc. (“NTB”) delivered its written opinion, dated January
22, 2007, to the special committee of the independent directors
of
Crested, to the board of directors of Crested, to the effect
that, as of
such date and based upon and subject to the factors, qualifications,
limitations and assumptions set forth therein. NTB’s opinion
states that the exchange ratio is fair and reasonable from
a financial
point of view to the minority shareholders of Crested. As of
October 12, 2007, NTB delivered an updated written opinion,
as of that
date, to the same effect. NTB has been paid a fee by Crested, none
of which is contingent upon consummation of the
merger.
|
|
Q:
|
What
do I need to do now?
|
|
A:
|
After
you have carefully read this entire document and such other information
you deem appropriate, please vote your shares of Crested common
stock. You may do this by completing, signing, dating and
mailing the enclosed proxy card. A return envelope is
enclosed. This will enable your shares to be represented and
voted at the Crested special
meeting.
|
|
Q:
|
What
if I do not vote, do not fully complete my proxy card, or fail
to instruct
my broker?
|
|
A:
|
If
you do not submit a proxy or instruct your broker how to vote
your shares
if your shares are held in “street name,” and you do not vote in person at
the special meeting, the effect will be the same as if you voted
“AGAINST” the adoption of the merger
agreement. If you submit a signed proxy without specifying the
manner in which you would like your shares to be voted, your
shares will
be voted “FOR” the adoption of the merger
agreement.
|
|
Q:
|
If
my shares are held in “street name” by my broker, will my broker
automatically vote my shares for
me?
|
|
A:
|
No. Your
broker will not be able to vote your shares without instructions
from
you. You should instruct your broker to vote your shares, and
you should follow the directions your broker provides. Please
refer to the voting form used by your broker to see if it offers
telephone
or Internet voting.
|
|
Q:
|
What
if I fail to instruct my
broker?
|
|
A:
|
If
you fail to instruct your broker to vote your shares and the
broker
submits an unvoted proxy, the resulting broker “non-vote” will be counted
toward a quorum at the respective special meeting, but the effect
will be
the same as if you voted “AGAINST” the adoption of the
merger.
|
|
Q:
|
Can
I attend the special meeting and vote my shares in
person?
|
|
A:
|
Yes. Holders
of record of Crested common stock are invited to attend the special
meeting and to vote in person at the meeting. If a broker holds
your shares, then you are not a record holder and you must ask
your broker
how you can vote in person at the special
meeting.
|
|
Q:
|
Can
I change my vote?
|
|
A:
|
Yes. If
you have not voted through your broker, there are three ways
you can
change your proxy instructions after you have submitted your
proxy
card.
|
·
|
First,
you may send a written notice revoking your proxy to the person
to whom
you submitted your proxy.
|
·
|
Second,
you may complete and submit a new proxy card. The latest proxy
actually received from a Crested shareholder before the meeting
will be
counted, and any earlier proxy will automatically be
revoked.
|
·
|
Third,
you may attend the Crested special meeting and vote in
person. Any earlier proxy will thereby be automatically
revoked. However, simply attending the meeting without voting
will not revoke your proxy.
|
·
|
If
you have instructed a broker to vote your shares, you must follow
the
directions you receive from your broker in order to change or
revoke your
vote.
|
|
Q:
|
When
do you expect to complete the
merger?
|
|
A:
|
We
expect to complete the merger in the fourth quarter of
2007. However, we cannot guarantee when or if the merger will
occur.
|
|
Q:
|
Will
I have appraisal rights as a result of the
merger?
|
|
A:
|
Yes. Under
Sections 7-113-101 to 7-113-302 of the Colorado Business Corporation
Act,
under certain circumstances, you are entitled to dissent from
the merger
and have the value of your Crested shares
appraised.
|
|
Q:
|
What
are the tax consequences of the merger to
me?
|
|
A:
|
The
merger is intended to qualify as a reorganization within the
meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended
(the
“Code”), so that for U.S. federal income tax purposes, you will not
recognize gain or loss on the receipt of USE shares. Each of
USE’s and Crested’s obligations under the merger agreement are conditioned
on the receipt of opinions that the merger will qualify as a
reorganization for United States federal income tax
purposes.
|
|
Q:
|
Should
I send in my stock certificates
now?
|
|
A:
|
No,
you should not send in your stock certificates at this
time. Crested shareholders will need to exchange their Crested
stock certificates for USE shares after we complete the
merger. USE will send you instructions for exchanging stock
certificates at that time.
|
|
Q:
|
How
will Crested shareholders receive the merger
consideration?
|
|
A:
|
Following
the merger, you will receive a letter of transmittal and instructions
on
how to obtain the merger consideration in exchange for your Crested
common
stock. You must return the completed letter of transmittal and
your Crested stock certificates as described in the instructions,
and you
will receive the merger consideration as soon as practicable
after USE
receives your completed letter of transmittal and Crested stock
certificates. If you hold shares through a brokerage account,
your broker will handle the surrender of stock certificates and
the
receipt of your merger
consideration.
|
|
Q:
|
Who
will help answer my
questions?
|
|
A:
|
If
you have any questions about the transaction or how to submit
your proxy,
or if you need additional copies of this proxy statement/prospectus,
the
enclosed proxy card, voting instructions, or the election form,
you should
contact Robert Scott Lorimer, CFO/Treasurer, Crested Corp., 877
N. 8th
W.,
Riverton, Wyoming 82501, telephone
307.856.9271.
|
·
|
whether
feasibility studies will show, for any of the properties, that
the
minerals can be mined and processed
profitably;
|
·
|
commodity
prices for gold, uranium, molybdic oxide, as well as oil and
gas must be
at levels so the properties can be exploited at a profit;
and
|
·
|
whether
the feasibility studies will show volume and grades of mineralization,
and
manageable costs of development, mining and processing, which
are
sufficient to bring industry partners to the point of
investment.
|
July
31, 2007
|
$ |
-
|
||
June
30, 2007
|
$ |
3,250,800
|
||
March
31, 2007
|
$ |
12,963,900
|
||
December
31, 2006
|
$ |
13,277,200
|
||
December
31, 2005
|
$ |
10,821,800
|
||
December
31, 2004
|
$ |
9,650,900
|
||
December
31, 2003
|
$ |
9,480,300
|
||
December
31, 2002
|
$ |
8,553,900
|
||
May
31, 2002
|
$ |
7,560,700
|
·
|
$750,000
cash (paid in advance on July 13, 2006) and recorded as a refundable
deposit.
|
·
|
6,607,605
Uranium One common shares. On April 30, 2007, the Uranium One
common shares closed at CAD$16.65 per share on the TSX (approximately
US$15.04).
|
·
|
$6,606,000
cash, comprised of (i) $5,020,900 as a “UPC-Related Payment” to pay USE
and Crested for transferring to Uranium One their contractual
rights with
UPC; and (ii) $1,585,100 in reimbursements for USE’s and Crested’s
property expenditures from July 10,
2006.
|
(ii)
|
Reimbursements:
|
·
|
$1,585,100
for property acquisition and exploration costs, and Shootaring
Mill
holding expenses.
|
·
|
Crested’s
principal asset is its ownership, with USE, of the Lucky Jack
Property’s
patented and unpatented molybdenum claims located near Crested
Butte,
Colorado, and a related water treatment plant which is located
on several
of the claims.
|
·
|
eliminate
the cost of paying for Crested’s operations. The primary costs
and expenses which will be eliminated are those related to regulatory
reporting, audits, and administrative time consumed in the management
of
Crested;
|
·
|
increase
USE’s working capital; and
|
·
|
improve
how USE is perceived in the stock market and possibly increase
USE’s
ability to raise capital. Management believes that USE’s
majority ownership of Crested and the operation of the Joint
Venture, when
Crested has no business operations separate from USE, is perceived
by the
marketplace to be complex and
unwieldy.
|
·
|
Crested’s
board of directors approved the merger because, among other
things:
|
·
|
the
merger will maximize value to the Crested shareholders, because
the
combined assets will be administered by one company, under one
set of
officers, directors, and dedicated employees;
and
|
·
|
there
will be substantially more liquidity for the minority shareholders
to
trade in USE stock as compared to
Crested.
|
·
|
If
the merger is not completed, Crested may not have sufficient
capital to
succeed as an independent public company without the continued
funding of
USE. If the merger is not completed, Crested may no longer have
the benefit of the USE employees, and Crested may have to establish
separate administrative offices and hire independent officers,
which would
substantially increase its expenses. The Crested board of directors,
consistent with the recommendation of the special committee of
independent
Crested directors, has recommended that the minority shareholders
of
Crested vote “FOR” the merger as being in their best
interest.
|
Implied
Value of
|
||||||||||||
USE
Common
|
Crested
Common
|
One
Share of
|
||||||||||
Stock
|
Stock
|
Crested
Common
|
||||||||||
Price
per Share
|
Price
per Share
|
Stock
|
||||||||||
January
22, 2007
|
$ |
4.63
|
$ |
2.25
|
$ |
2.32
|
||||||
March
30, 2007
|
$ |
5.32
|
$ |
2.62
|
$ |
2.66
|
||||||
June
29, 2007
|
$ |
5.38
|
$ |
2.53
|
$ |
2.69
|
||||||
August
21, 2007
|
$ |
4.74
|
$ |
2.35
|
$ |
2.37
|
||||||
·
|
there
is no temporary restraining order, preliminary or permanent
injunction or
other order or decree issued by any court of competent jurisdiction
or
other statute, law, rule, legal restraint or prohibition in
effect
preventing the completion of the
merger;
|
·
|
USE’s
shares to be issued in the merger have been approved for listing
on
Nasdaq, subject to official notice of
issuance;
|
·
|
the
merger agreement is adopted by the holders of a majority of
minority
shares of Crested;
|
·
|
holders
of not more than 200,000 Crested shares have dissented from
the merger;
and
|
·
|
at
any time before consummation of the merger, USE’s closing stock price has
not been 20% more or less than the 2-to-1 exchange ratio as
applied to the
Crested stock price, for two or more consecutive trading days,
and neither
USE or Crested has terminated the merger agreement. For
example, if Crested’s price per share is $2.40, the implied value for two
Crested shares under the exchange ratio would be $4.80. Under
those circumstances, if USE’s price is more than $5.768 and Crested’s
price stays at $2.40, or if Crested’s price stays at $2.40 but USE’s price
decreases to less than $3.84, then the merger agreement could
be
terminated by either USE or
Crested.
|
Six
Months Ended
|
Year
Ended
|
|||||||||||||||||||||||||||
June
30,
|
December
31,
|
|||||||||||||||||||||||||||
2007
|
2006
|
2006
|
2005
|
2004
|
2003
|
2002
|
||||||||||||||||||||||
(Unaudited)
|
(Unaudited)
|
|||||||||||||||||||||||||||
Current
assets
|
$ |
39,637,400
|
$ |
3,385,200
|
$ |
10,751,300
|
$ |
95,100
|
$ |
3,800
|
$ |
3,300
|
$ |
3,300
|
||||||||||||||
Current
liabilities
|
13,654,900
|
12,435,800
|
14,482,100
|
10,928,000
|
9,747,300
|
9,408,300
|
8,553,900
|
|||||||||||||||||||||
Working
capital (deficit)
|
25,982,500
|
(9,050,600 | ) | (3,730,800 | ) | (10,832,900 | ) | (9,743,500 | ) | (9,405,000 | ) | (8,550,600 | ) | |||||||||||||||
Total
assets
|
44,470,800
|
8,065,900
|
15,123,000
|
8,682,200
|
2,983,600
|
4,387,100
|
5,889,900
|
|||||||||||||||||||||
Long-term
obligations(1)
|
220,900
|
1,360,600
|
266,600
|
1,260,800
|
1,289,100
|
1,268,900
|
964,000
|
|||||||||||||||||||||
Shareholders'
equity (deficit)
|
30,537,200
|
(5,740,600 | ) |
364,200
|
(3,516,700 | ) | (8,062,900 | ) | (6,300,200 | ) | (3,638,100 | ) | ||||||||||||||||
(1)
Included $53,000, $1,145,000 at June 30, 2007 and June 30,
2006
respectively as well as $51,000, $1,045,200, 1,073,500, $1,053,300
and
$748,400
|
||||||||||||||||||||||||||||
of
accrued reclamation costs on uranium properties at December
31, 2006,
2005, 2004, 2003 and 2002 respectively.
|
||||||||||||||||||||||||||||
Revenues
|
$ |
--
|
$ |
--
|
$ |
--
|
$ |
--
|
$ |
--
|
$ |
--
|
$ |
--
|
||||||||||||||
Income
(loss) before equity in loss
|
||||||||||||||||||||||||||||
of
affiliates and income taxes
|
53,051,900
|
(1,879,600 | ) | (157,300 | ) |
6,341,200
|
(320,000 | ) | (263,300 | ) | (102,400 | ) | ||||||||||||||||
Equity
in (loss) gain of affiliates
|
(3,727,500 | ) | (344,300 | ) | (3,625,600 | ) | (1,699,800 | ) | (1,447,500 | ) | (2,114,600 | ) | (1,055,000 | ) | ||||||||||||||
(Provision
for) Benefit from
|
--
|
--
|
--
|
|||||||||||||||||||||||||
Income
Taxes
|
(17,841,700 | ) |
--
|
7,633,800
|
(100,000 | ) | ||||||||||||||||||||||
Cumulative
effect of
|
||||||||||||||||||||||||||||
accounting
change
|
--
|
--
|
--
|
(293,800 | ) |
--
|
||||||||||||||||||||||
Net
income (loss)
|
$ |
31,482,700
|
$ | (2,223,900 | ) | $ |
3,850,900
|
$ |
4,541,400
|
$ | (1,767,500 | ) | $ | (2,671,700 | ) | $ | (1,157,400 | ) | ||||||||||
Net
income (loss) per share - Basic
|
$ |
1.83
|
$ | (0.13 | ) | $ |
0.22
|
$ |
0.26
|
$ | (0.10 | ) | $ | (0.16 | ) | $ | (0.07 | ) | ||||||||||
Net
income (loss) per share - Diluted
|
$ |
1.77
|
$ | (0.13 | ) | $ |
0.22
|
$ |
0.26
|
$ | (0.10 | ) | $ | (0.16 | ) | $ | (0.07 | ) | ||||||||||
Six
Months Ended
|
Year
Ended
|
|||||||||||||||||||||||||||
June
30,
|
December
31,
|
|||||||||||||||||||||||||||
2007
|
2006
|
2006
|
2005
|
2004
|
2003
|
2002
|
||||||||||||||||||||||
(Unaudited)
|
(Unaudited)
|
|||||||||||||||||||||||||||
Current
assets
|
$ |
110,317,400
|
$ |
19,866,200
|
$ |
43,325,200
|
$ |
7,840,600
|
$ |
5,421,500
|
$ |
5,191,400
|
$ |
4,755,300
|
||||||||||||||
Current
liabilities
|
23,653,300
|
1,339,100
|
11,595,200
|
1,232,200
|
6,355,900
|
1,909,700
|
2,044,400
|
|||||||||||||||||||||
Working
capital (deficit)
|
86,664,100
|
18,527,100
|
31,730,000
|
6,608,400
|
(934,400 | ) |
3,281,700
|
2,710,900
|
||||||||||||||||||||
Total
assets
|
123,215,500
|
37,318,100
|
51,901,400
|
38,106,700
|
30,703,700
|
23,929,700
|
28,190,600
|
|||||||||||||||||||||
Long-term
obligations(1)
|
778,200
|
8,602,400
|
882,000
|
7,949,800
|
13,317,400
|
12,036,600
|
14,047,300
|
|||||||||||||||||||||
Shareholders'
equity
|
90,422,100
|
19,818,600
|
32,977,400
|
24,558,200
|
6,281,300
|
6,760,800
|
8,501,600
|
|||||||||||||||||||||
(1)Includes
$129,300, of accrued reclamation costs on properties at June
30,
2007, $6,138,000 at June 30, 2006, $124,400, at December 31,
2006,
|
||||||||||||||||||||||||||||
$5,669,000
at December 31, 2005, $7,882,400 at December 31, 2004, $7,264,700
at
December 31, 2003 and $8,906,800 at December 31,
2002 respectively.
|
Seven
Months
|
||||||||||||||||||||||||||||||
Six
Months Ended
|
Year
Ended
|
Ended
|
||||||||||||||||||||||||||||
June
30,
|
December
31,
|
December
31,
|
December
31,
|
December
31,
|
December
31,
|
|||||||||||||||||||||||||
2007
|
2006
|
2006
|
2005
|
2004
|
2003
|
2002
|
||||||||||||||||||||||||
(Unaudited)
|
(Unaudited)
|
|||||||||||||||||||||||||||||
Operating
revenues
|
$ |
325,100
|
$ |
324,900
|
$ |
813,400
|
$ |
849,500
|
$ |
815,600
|
$ |
513,500
|
$ |
673,000
|
||||||||||||||||
Loss
from
|
||||||||||||||||||||||||||||||
continuing
operations
|
(11,463,500 | ) | (5,910,800 | ) | (16,670,700 | ) | (6,066,900 | ) | (4,983,100 | ) | (5,066,800 | ) | (3,524,900 | ) | ||||||||||||||||
Other
income & expenses
|
108,798,600
|
(1,482,800 | ) |
2,302,700
|
(484,000 | ) |
465,100
|
(311,500 | ) | (387,100 | ) | |||||||||||||||||||
(Loss)
income before minority
|
||||||||||||||||||||||||||||||
interest,
equity in income (loss)
|
||||||||||||||||||||||||||||||
of
affiliates, income taxes,
|
||||||||||||||||||||||||||||||
discontinued
operations,
|
||||||||||||||||||||||||||||||
and
cumulative effect of
|
||||||||||||||||||||||||||||||
accounting
change
|
97,335,100
|
(7,393,600 | ) | (14,368,000 | ) | (6,550,900 | ) | (4,518,000 | ) | (5,378,300 | ) | (3,912,000 | ) | |||||||||||||||||
Minority
interest in loss (income)
|
||||||||||||||||||||||||||||||
of
consolidated subsidiaries
|
(3,698,600 | ) |
47,600
|
88,600
|
185,000
|
207,800
|
13,000
|
54,800
|
||||||||||||||||||||||
(Provision
for) Benefit from
|
||||||||||||||||||||||||||||||
Income
Taxes
|
(35,659,300 | ) |
--
|
15,331,600
|
--
|
--
|
--
|
--
|
||||||||||||||||||||||
Discontinued
operations, net of tax
|
--
|
--
|
--
|
15,207,400
|
(1,938,500 | ) | (2,060,400 | ) |
17,100
|
|||||||||||||||||||||
Cumulative
effect of
|
||||||||||||||||||||||||||||||
accounting
change
|
--
|
--
|
--
|
--
|
--
|
1,615,600
|
--
|
|||||||||||||||||||||||
Preferred
stock dividends
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
|||||||||||||||||||||||
Net
income (loss)
|
||||||||||||||||||||||||||||||
to
common shareholders
|
$ |
57,977,200
|
$ | (7,346,000 | ) | $ |
1,052,200
|
$ |
8,841,500
|
$ | (6,248,700 | ) | $ | (5,810,100 | ) | $ | (3,840,100 | ) | ||||||||||||
Seven
Months
|
||||||||||||||||||||||||||||||
Six
Months Ended
|
Year
Ended
|
Ended
|
||||||||||||||||||||||||||||
June
30,
|
December
31,
|
December
31,
|
December
31,
|
December
31,
|
December
31,
|
|||||||||||||||||||||||||
2007
|
2006
|
2006
|
2005
|
2004
|
2003
|
2002
|
||||||||||||||||||||||||
(Unaudited)
|
(Unaudited)
|
|||||||||||||||||||||||||||||
Per
share financial data
|
||||||||||||||||||||||||||||||
Operating
revenues
|
$ |
0.02
|
$ |
0.02
|
$ |
0.04
|
$ |
0.05
|
$ |
0.05
|
$ |
0.05
|
$ |
0.06
|
||||||||||||||||
Loss
from
|
||||||||||||||||||||||||||||||
continuing
operations
|
$ | (0.58 | ) | $ | (0.32 | ) | (0.88 | ) | (0.38 | ) | (0.38 | ) | (0.44 | ) | (0.33 | ) | ||||||||||||||
Other
income & expenses
|
$ |
5.51
|
$ | (0.08 | ) |
0.12
|
(0.03 | ) |
0.04
|
(0.03 | ) | (0.03 | ) | |||||||||||||||||
(Loss)
income before minority
|
||||||||||||||||||||||||||||||
interest,
equity in income (loss)
|
||||||||||||||||||||||||||||||
of
affiliates, income taxes,
|
||||||||||||||||||||||||||||||
discontinued
operations,
|
||||||||||||||||||||||||||||||
and
cumulative effect of
|
||||||||||||||||||||||||||||||
accounting
change
|
$ |
4.93
|
$ | (0.41 |