SHERIDAN, Wyo., Feb. 24 /PRNewswire-FirstCall/ -- Pinnacle Gas Resources, Inc. (Nasdaq: PINN) announced today that it has entered into a definitive agreement pursuant to which an investor group will acquire Pinnacle in an all cash transaction for $0.34 per share of common stock, representing a premium of approximately 28% to Pinnacle's closing share price of $0.265 on February 23, 2010. The investor group is led by Scotia Waterous ( USA) Inc. and includes certain members of Pinnacle's management team. Upon consummation of the merger, the common stock of Pinnacle will no longer be publicly owned or publicly traded. The Agreement and Plan of Merger was unanimously approved by Pinnacle's Board of Directors, upon the unanimous recommendation of a Special Committee of the Board, which was comprised solely of independent directors. The Board has recommended that Pinnacle shareholders vote in favor of the merger agreement. The Special Committee was formed in October 2009 to review proposals regarding asset divestitures, strategic transactions, capital restructuring (including additional or new debt or equity financing), and other alternatives to address the Company's liquidity constraints arising out of the recent economic and natural gas pricing environment. "The Special Committee considered a range of potential alternatives, including continuing to operate as an independent entity, possible sales of certain assets, the Company's ability to issue additional equity in a public or private offering, and restructurings of the Company's outstanding debt," said Tom McGonagle, Chairman of the Board and member of the Special Committee. "After conducting an exhaustive evaluation of the alternatives, the Special Committee and Pinnacle's Board of Directors unanimously concluded that this transaction with Scotia Waterous leading the investor group is in the best interests of our shareholders." The transaction is subject to the approval of Pinnacle's shareholders (including the approval of a majority of the shareholders of Pinnacle who are unaffiliated with DLJ Merchant Banking Partners III, L.P. or the Company's Chief Executive Officer or Chief Financial Officer), customary closing conditions and, unless waived by the investor group, certain acceptable amendments to its credit facility. The merger is expected to close during the second quarter of 2010.