Proxy Advisor Backs Bid Target InterOil Against Dissident
May 31 2016 - 4:13AM
Dow Jones News
By Robb M. Stewart
MELBOURNE, Australia--Oil Search Ltd. (OSH.AU) has garnered
support for its US$2.2 billion offer for InterOil Corp. (IOC) from
a major proxy advisor, which recommended that InterOil shareholders
reject a move by the energy company's founder to wrestle control of
the board.
In a report published Tuesday, Institutional Shareholder
Services recommended that shareholders vote in favor of InterOil's
board nominees and against dissidents led by former Chief Executive
and Chairman Phil Mulacek.
The recommendation, which was welcomed by New York-listed
InterOil, comes as Oil Search's managing director meets this week
with investors in North America to promote the deal.
The bid has been attacked by Mr. Mulacek, who said it
significantly undervalued InterOil. He also criticized InterOil for
unveiling the takeover just before a June 14 shareholder meeting
and planned vote on his proposal to add himself and four associates
to the company's board.
Mr. Mulacek, who with his company Petroleum Independent &
Exploration LLC holds a share of more than 7.5% in InterOil,
earlier this year accused the company's board of failing to provide
effective oversight and destroying shareholder value. Mr. Mulacek,
who led InterOil's exploration efforts in Papua New Guinea that led
to the discovery of the promising Elk and Antelope gas fields,
stepped down as CEO in April 2013.
InterOil has urged shareholders to vote against Mr. Mulacek's
board nominees and rejected his claims. In a letter to investors
defending the takeover, the Singapore-based company said the bid
represented a 33% premium to the volume-weighted average share
price over the previous three months and potentially offered a
further cash payment based on the resources in the Elk-Antelope
field.
ISS, which offers corporate governance advice for asset
managers, hedge funds and other investors, said that while Mr.
Mulacek's claims appeared to have some merits, putting the
dissidents on the board could complicate the Oil Search acquisition
process, which might not be in the best interest of other
shareholders.
"More importantly, the dissident has not provided an alternative
proposal which is seen to be superior to the acquisition of the
company by Oil Search," ISS said in its analysis.
The proxy firm also said that although InterOil's share price
had slumped since the departure of Mr. Mulacek as CEO, the
company's total shareholder return was in line with the crude-oil
price index and slightly outperformed its peer median.
Oil Search, based in the Papua New Guinea capital of Port
Moresby but listed in Australia, earlier this month reached a deal
to buy InterOil for US$40.25 a share. The deal also offers the
potential of a further cash payment for additional natural gas that
might be formally identified in a major discovery on Papua New
Guinea known as Elk-Antelope that is at the heart of a proposed
liquefied natural gas project being led by France's Total SA
(TOT).
Oil Search in a separate deal agreed to sell some of InterOil's
interests in the Elk-Antelope and other exploration efforts in
Papua New Guinea to partner Total for about US$1.2 billion. That
would see Oil Search's stake in Total's planned Papua LNG project
rise from nearly 23% to 29% and lift Total's position to just more
than 48% from 40% now.
The takeover of InterOil could potentially open the Total-led
project to collaborations with Oil Search's other major asset, its
29% stake in a liquefied natural gas project operated by Exxon
Mobil Corp. (XOM) that can produce 6.9 million metric tons a
year.
Write to Robb M. Stewart at robb.stewart@wsj.com
(END) Dow Jones Newswires
May 31, 2016 03:58 ET (07:58 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
TotalEnergies (EU:TTE)
Historical Stock Chart
From Mar 2024 to Apr 2024
TotalEnergies (EU:TTE)
Historical Stock Chart
From Apr 2023 to Apr 2024