HOUSTON, March 31, 2016 /PRNewswire/ -- The founding
shareholder and former chairman and Chief Executive Officer of
InterOil Corporation ("InterOil" or the "Company") (NYSE: IOC),
Phil Mulacek, and Petroleum
Independent & Exploration, LLC (the "Concerned InterOil
Shareholders"), announced today that the Concerned InterOil
Shareholders and certain other shareholders who collectively own
over 7.5% of the issued and outstanding shares of the Company have
requisitioned (the "Requisition") a special meeting of InterOil
shareholders (the "Special Meeting") at which shareholders will be
asked to approve several resolutions focused on improving the
corporate governance of InterOil.
"These proposals reflect fundamental concerns of the Concerned
InterOil Shareholders about the Board's approach to setting the
Company's strategy and its oversight of management. They are
intended to increase transparency and align Board and management
compensation with growth in shareholder value. If passed by
shareholders and adopted by the Board, these proposals will also
provide for meaningful shareholder input on transactions that
materially affect shareholder value," Mr. Mulacek said.
"The objective of the Concerned InterOil Shareholders is to help
ensure that future transactions are accretive to the long-term
growth in shareholder value. The Concerned InterOil Shareholders
look forward to engaging in a constructive dialog with the Board
and our fellow shareholders and working with the Company to
implement the policies we believe are required to position InterOil
for success," continued Mr. Mulacek.
The Requisition proposes that resolutions addressing the
following matters be put to a vote by InterOil's shareholders:
- reducing the size of the InterOil board of directors (the
"Board") from ten to six, which the shareholders may specify under
the Company's By-laws. The Concerned InterOil Shareholders believe
that the Company's current ten-member Board is too large and
expensive for a company with no operations and that reducing the
size of the Board and aligning it more with shareholder interests
through the other proposals in the Requisition would more
efficiently use the Company's capital and other resources and
enhance shareholder value going forward;
- requesting the Board to amend InterOil's compensation policy to
ensure industry best practices and align director and management
compensation with shareholder value accretion by limiting the cash
component of director compensation, imposing holding periods on
equity compensation and restricting "change of control" cash
payments to senior managers;
- requesting the Board to amend InterOil's policy on
qualifications of Board nominees to increase focus on core
competencies related to InterOil's onshore oil and gas assets in
Papua New Guinea by requiring that
at least one-third of the directors have direct experience in
exploration and development of such assets. In the Concerned
InterOil Shareholders' view, having proven Papua New
Guinea expertise in a significant number of the
directors would enhance the Board's ability to supervise and direct
management's choice and execution of exploration and development
projects in Papua New Guinea;
- requesting the Board to amend the manner and extent of required
third-party reviews of InterOil's reserves and resources to
strengthen and include review of management's discovery
announcements and development plans so that shareholders and the
public may more fully understand InterOil's operations. The
Concerned InterOil Shareholders believe that this enhanced
third-party review will increase the transparency of the Company's
disclosure about its resources/reserves and discoveries; improve
the quality and objectivity in the Company's decision-making
process in determining whether and how to explore and develop its
assets; improve management accountability to shareholders; and
reduce the likelihood that the Company's capital and other
resources will be spent on exploration and development projects
that are unlikely to be commercially viable;
- requesting the Board to amend its charter to require
shareholder approval of transactions over 10% of total asset value
to help ensure that in the future, material transactions are more
aligned with the interests of InterOil's shareholders. The
Concerned InterOil Shareholders believe that certain recent
material transactions the Company has undertaken without
Shareholder approval, including the transaction with TOTAL S.A.,
have been non-accretive for Shareholder value. To help ensure that
future material transactions are aligned with the interests of
Shareholders, the Concerned InterOil Shareholders believe that the
Board and management should be required to obtain prior Shareholder
approval of material transactions in order to avoid transactions
that, among other things, may impair the Company's capital or its
ability to undertake its core operational business of exploration
and development of upstream oil and gas in Papua New Guinea, or that trigger payments of
transaction break-up fees through failure to secure Shareholder
approval of the transaction; and
- requesting the Board to adopt and comply with a rigorous
disclosure policy to further increase transparency and consistency
in public disclosure and accountability of the Board and management
to shareholders.
The Concerned InterOil Shareholders have suggested that the
Special Meeting be held in conjunction with the June 14, 2016
annual and special meeting of shareholders, which InterOil recently
announced (the "InterOil 2016 Meeting"). The Requisition has been
made pursuant to the Business Corporations Act (Yukon) ("YBCA")
A copy of the Requisition was delivered to InterOil on
March 21, 2016, and is included with
this press release.
InterOil has not yet responded to the Concerned InterOil
Shareholders regarding the Requisition. InterOil has until
April 12, 2016 to call the Special
Meeting. If InterOil does not call the Special Meeting by that
time, the Concerned InterOil Shareholders are themselves entitled
to call the Special Meeting.
Advisors:
The Concerned InterOil Shareholders have retained Wildeboer
Dellelce LLP and Taft Stettinius & Hollister LLP as their legal advisors, and Bayfield Strategy
as its strategic communications advisor in connection with this
matter.
About Phil Mulacek:
Mr. Mulacek is the founding shareholder of InterOil and served
as chairman, CEO and a director until his retirement from the
company in November, 2013. During his tenure at the company, its
market capitalization grew from approximately US$10 million (~ US$0.50/share) to over
US$4.5 billion
(~ US$92.00/share) at his departure. The company also
constructed the first petroleum refinery in Papua New Guinea, a 36,000 bpd facility at
Napa Napa, with a fully integrated downstream business that
contributed to support of the company.
Mr. Mulacek led InterOil's discovery of the world-class Elk and
Antelope gas fields in the Gulf Province of Papua New Guinea, with approximately 10 to 15
tcfe of certified hydrocarbon resource, and the nearby Triceratops
gas field, with approximately 1 tcfe of certified hydrocarbon
resource. These fields have been among the largest onshore
discoveries in PNG and Asia recent
years.
Since retiring from InterOil in 2013, Mr. Mulacek has remained
actively involved in the upstream oil and gas industry in
Papua New Guinea, the US and
elsewhere globally through his affiliated companies with offices in
Singapore and branch offices in
the United States. He resides in
Singapore.
Cautionary Statement Regarding Forward-Looking
Statements:
This press release contains forward-looking statements. All
statements contained in this filing that are not clearly historical
in nature or that necessarily depend on future events are
forward-looking, and the words "anticipate," "believe," "expect,"
"estimate," "plan," and similar expressions are generally intended
to identify forward-looking statements. These statements are based
on current expectations of the Concerned InterOil Shareholders and
currently available information. They are not guarantees of future
performance, involve certain risks and uncertainties that are
difficult to predict, and are based upon assumptions as to future
events that may not prove to be accurate. The Concerned InterOil
Shareholders do not assume any obligation to update any
forward-looking statements contained in this press release.
Information Contact:
For additional information on this press release and a copy of
the Requisition (including the proposed resolutions), please
contact the Concerned InterOil Shareholders at +1 (832) 510-7028,
or by email at info@concernedinteroilshareholders.com
Media Contact:
Bayfield Strategy, Inc.
Riyaz Lalani
+1 (416) 907-9365
rlalani@bayfieldstrategy.com
Additional Information:
The Concerned InterOil Shareholders do not know at this time
whether the business called for in the Requisition will be put to a
vote by the shareholders of InterOil at the InterOil 2016
Meeting.
Information in Support of Public Broadcast
Solicitation:
The Concerned InterOil Shareholders are relying on the exemption
under section 9.2(4) of National Instrument 52-102 - Continuous
Disclosure Obligations to make this public broadcast
solicitation. The following information is provided in accordance
with corporate and securities laws applicable to public broadcast
solicitations.
This solicitation is being made by the Concerned InterOil
Shareholders and not by or on behalf of the management of
InterOil.
The address of InterOil is 163 Penang Road, Winsland House II,
#06-02, Singapore, 238463.
The Concerned InterOil Shareholders have filed an information
circular dated March 31, 2016 (the
"Concerned InterOil Shareholders Circular") concerning the
Requisition. The Concerned InterOil
Shareholders Circular will be available on InterOil's company
profile on SEDAR at http://www.sedar.com. The Concerned InterOil
Shareholders have also filed a statement of beneficial ownership on
Form 13-D (the "Form 13-D"), with the U.S. Securities and Exchange
Commission. The Form 13-D also includes the Requisition as an
Exhibit and is available at
https://www.sec.gov/Archives/edgar/data/1221715/000114420416090986/v435587_sc13d.htm.
The Concerned InterOil Shareholders have not yet made a
determination as to whether they will formally solicit a proxy from
any person in connection with the Requisition. If the Concerned
InterOil Shareholders do choose to solicit proxies for the
Special Meeting, they may do so by mail, telephone,
facsimile, email or other electronic means as well as by newspaper
or other media advertising and in person by directors, officers and
employees of the Concerned InterOil Shareholders who will not be
specifically remunerated therefor. In addition, the Concerned
InterOil Shareholders may solicit proxies in reliance upon the
public broadcast exemption to the solicitation requirements under
applicable Canadian corporate and securities laws, conveyed by way
of public broadcast, including press release, speech or
publication, and by any other manner permitted under applicable
Canadian laws. The Concerned InterOil Shareholders may engage the
services of one or more agents and authorize other persons to
assist them in soliciting proxies on behalf of the Concerned
InterOil Shareholders.
At this time, the Concerned InterOil Shareholders have not
entered into any agreement pursuant to which an agent has agreed
that it will act as proxy agent for the Concerned InterOil
Shareholders should the Concerned InterOil Shareholders commence a
formal solicitation of proxies. All costs incurred for the
solicitation will be borne by the Concerned InterOil Shareholders.
The Concerned Shareholders will seek
reimbursement of their costs pursuant to the YBCA.
A registered holder of common shares of
InterOil that gives a proxy may revoke it: (a) by completing and
signing a valid proxy bearing a later date and returning it in
accordance with the instructions contained in the form of proxy to
be provided by the Concerned InterOil Shareholders, or as otherwise
provided in the proxy circular, once made available to
shareholders; (b) by depositing an instrument in writing executed
by the shareholder or by the shareholder's attorney authorized in
writing, as the case may be: (i) at the registered office of
InterOil at any time up to and including the last business day
preceding the day of the Special Meeting or any adjournment or
postponement of the Special Meeting is to be held, or (ii) with the
chairman of the Special Meeting prior to its commencement on the
day of the Special Meeting or any adjournment or postponement of
the Special Meeting; or (c) in any other manner permitted by
law.
A non-registered holder of common shares of InterOil will be
entitled to revoke a form of proxy or voting instruction form given
to an intermediary at any time by written notice to the
intermediary in accordance with the instructions given to the
non-registered holder by its intermediary. It should be noted that
revocation of proxies or voting instructions by a non-registered
holder can take several days or even longer to complete and,
accordingly, any such revocation should be completed well in
advance of the deadline prescribed in the form of proxy or voting
instruction form to ensure it is given effect in respect of the
meeting.
Neither the Concerned InterOil
Shareholders, nor any directors or officers, or any associates or
affiliates of the foregoing, has: (i) any material interest, direct
or indirect, in any transaction since the beginning of InterOil's
most recently completed financial year or in any proposed
transaction that has materially affected or would materially affect
InterOil or any of its subsidiaries; or (ii) any material interest,
direct or indirect, by way of beneficial ownership of securities or
otherwise, in any matter currently known to be acted on at the
Special Meeting, other than the matters set forth in the
Requisition.
However, certain of the Concerned InterOil Shareholders are the
beneficial holders of minority indirect participation interests in
certain of InterOil's petroleum prospecting licenses and petroleum
retention licenses in Papua New
Guinea under indirect participation agreements with
InterOil. The Concerned InterOil Shareholders believe that these
indirect participation interests are not material to InterOil but
are nevertheless fully aligned and not in conflict with the
interests of InterOil shareholders.
REQUISITION FOR MEETING OF THE
SHAREHOLDERS OF INTEROIL CORPORATION
DATE: MARCH 18, 2016
TO: INTEROIL
CORPORATION (the "Corporation")
AND TO: EACH OF THE DIRECTORS OF THE CORPORATION
The undersigned, being the registered or beneficial holders of
not less than 5% (five percent) of the issued and outstanding
shares of the Corporation that carry the right to vote at the
meeting of shareholders sought to be held pursuant to this
requisition, hereby requisition the directors of the Corporation to
call a meeting of the shareholders of the Corporation (the
"Meeting") pursuant to the provisions of section 144
of the Business Corporations Act (Yukon), as amended (the
"Act"):
(a) to consider, and if deemed
advisable, pass, with or without variation, the ordinary resolution
attached as Schedule A to this Requisition (the "Director
Election Resolution");
(b) to consider, and if deemed
advisable, pass, with or without variation, the ordinary resolution
attached as Schedule B to this Requisition (the "Compensation
Committee Charter Resolution");
(c) to consider, and if deemed
advisable, pass, with or without variation, the ordinary resolution
attached as Schedule C to this Requisition (the "Nomination
and Governance Committee Resolution");
(d) to consider, and if deemed
advisable, pass, with or without variation, the ordinary resolution
attached as Schedule D to this Requisition (the "Reserves
Governance Committee Resolution");
(e) to consider, and if deemed
advisable, pass, with or without variation, the ordinary resolution
attached as Schedule E to this Requisition (the "Material
Transactions Resolution"); and
(f) to consider, and if deemed
advisable, pass, with or without variation, the ordinary resolution
attached as Schedule F to this Requisition (the "Disclosure
Policy Resolution").
[Remainder of Page
Intentionally Left Blank]
Pursuant to section 144(4) of the Act, if the directors do not
within twenty-one (21) days after receipt of this requisition call
such a Meeting, the undersigned shall call the Meeting.
Dated March 18, 2016
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Witness
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PHIL E.
MULACEK
Number of Shares
Held: 2,255,764
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FIVE STERLING
LP
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Authorized
Signatory
Number of Shares Held: 99,750
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STERLING MULACEK
TRUST
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Authorized
Signatory
Number of Shares Held: 39,681
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PETROLEUM
INDEPENDENT & EXPLORATION LLC
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Authorized
Signatory
Number of Shares Held: 127,000
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Witness
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GERARD RENE
JACQUIN
Number of Shares
Held: 1,248,368
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SCHEDULE A
THE DIRECTOR ELECTION RESOLUTION
BE IT RESOLVED, as an ordinary resolution, that in
accordance with Section 4 of By-Law No. 2 of the Corporation, the
number of directors to be elected at the 2016 annual meeting of the
Corporation's shareholders be fixed at six (6).
SCHEDULE B
THE COMPENSATION COMMITTEE CHARTER
RESOLUTION
BE IT RESOLVED, as an ordinary resolution, that the board
of directors of the Corporation consider and, if thought
appropriate, amend the charter of the Compensation Committee of the
board of directors of the Corporation (the "CC
Charter") as follows:
(a) by deleting Section 5.1 of the
CC Charter and adding the following:
"Director Compensation. The Committee shall periodically
review and make recommendations to the Board with respect to
compensation payable for serving as a director. In making these
recommendations to the Board, the Committee shall be guided by the
following guidelines (unless these guidelines are clearly
non-aligned with compensation best practices at the time as
certified by Advisors and disclosed in the Company's compensation
disclosure): (i) not less than 50% of the total compensation
payable for serving as a director shall be in the form of
equity-based compensation; (ii) for as long as the individual
serves as a director and for a period of one year from the date the
individual ceases serving as a director, that individual may not
sell, transfer or assign to any third party more than 50% of the
total number of shares of the Company received by way of
compensation for serving as a director; and (iii) the total
cash compensation payable to all directors of the Company for
service as directors shall not exceed an aggregate amount of
US$600,000 annually."
(b) by adding the following as the
last sentence of Section 5.3 of the CC Charter:
"In approving these compensation arrangements for Executive
Officers, the Committee shall be guided by the following
principles: (i) no Executive Officer shall receive a payment
in connection with a change-in-control transaction (a "Change
of Control Payment") unless the price per share payable to
shareholders as a result of the transaction exceeds both (x)
US$60.00 per share (based on the
number of shares outstanding as of the day this charter was amended
to include this provision, and as adjusted appropriately as a
result of consolidation, etc.) over a 30 day trailing VWAP (the
"Threshold Price"), and (y) the 30 day trailing VWAP
as of the date of the commencement of the Executive Officer's
employment with the Company; and (ii) the Change of Control Payment
may be pro-rated by the Board in its discretion above the Threshold
Price up to any maximum amount determined by the Board, based on
the price per share payable to shareholders as a result of the
transaction." In any event, any of these awards,
opportunities, agreements, arrangements, provisions, compensation
or benefits must clearly align with compensation best practices as
certified by Advisors and disclosed in the Company's compensation
disclosure."
SCHEDULE C
THE NOMINATION AND GOVERNANCE COMMITTEE
CHARTER RESOLUTION
BE IT RESOLVED, as an ordinary resolution, that the board
of directors of the Corporation consider and, if thought
appropriate, amend the charter of the Nomination and Governance
Committee of the board of directors of the Corporation (the
"NGC Charter") as follows:
(a) by deleting the first sentence
of Section 5.1 of the NGC Charter and replacing it with the
following sentence:
"The Committee shall formulate the criteria for directors, and
shall consider personal characteristics and core competencies
required of Board members when evaluating persons to be nominated
for election to the Board (including, for greater certainty, at
least one third of the directors must have direct skills,
competency and experience in matters relevant to the exploration
and development of the Company's onshore licenses and development
assets in the Papua New Guinea
jungle), taking into account the composition of the Board as a
whole."
(b) by deleting the second
sentence of Section 5.3 of the NGC Charter and replacing it with
the following sentence:
"The Committee shall also annually review each incumbent
director's past performance and skills (including, for greater
certainty, at least one third of the directors must have direct
skills, competency and experience in matters relevant to the
exploration and development of the Company's onshore licenses and
development assets in the Papua New
Guinea jungle) and recommend to the Board whether such
director should be nominated for re-election."
SCHEDULE D
THE RESERVES GOVERNANCE COMMITTEE CHARTER
RESOLUTION
BE IT RESOLVED, as an ordinary resolution, that the board
of directors of the Corporation consider and, if thought
appropriate, amend the charter of the Reserves Governance Committee
of the board of directors of the Corporation (the "RGC
Charter") as follows:
(a) by deleting Section 4(c) of
the RGC Charter and replacing it with the following:
"to review any proposed public disclosure or regulatory filings
by the Corporation with respect to any reserves and/or resources
evaluation and oil and gas activities and the material compliance
thereof with applicable regulatory requirements and, if
appropriate, make recommendations to the Board to approve or
disapprove of the release or filing thereof; provided that, subject
to and in further compliance with applicable securities laws,
whenever the Corporation files a report disclosing a certain well
location as a commercial discovery or otherwise provides disclosure
in that regard, the Committee shall request the Corporation to
disclose in reasonable detail: (i) the Corporation's view as to why
the location is a commercial discovery, including its views and
assumptions on costs of development (including the overall cost
breakdown for wells and operations); (ii) likely markets for
production from the discovery; and (iii) any update such discovery
implies to the most recent annual resource report."
(b) by deleting Section 4(d) of
the RGC Charter and replacing it with the following:
"to review and make recommendations to the Board respecting the
appointment of a qualified reserves evaluator or auditor pursuant
to the requirements of NI 51-101; provided that, subject to and in
further compliance with applicable securities laws, the Committee
shall, to the extent practicable:
(i) ensure that any qualified
reserves evaluator or auditor it recommends to the Board has
sufficient relevant experience in evaluating reserves and/or
resources similar to the Corporation's onshore licenses and
development assets in the Papua New
Guinea jungle; and
(ii) provided the evaluator
remains qualified in the Committee's view, maintain the same
evaluator from year to year to provide a more consistent assessment
of the Corporation's reserves over time."
(c) by deleting Section 4(k) of
the RGC Charter and replacing it with the following:
"to review the scope of the annual review of the Corporation's
reserves and/or resources; provided that in addition to complying
with the disclosure requirements of NI 51-101, such annual review
shall include an evaluation by the qualified reserves evaluator or
auditor of any new claimed discoveries by the Corporation referred
to in Section 4(c) of this Charter and the Corporation's related
assumptions and development plans."
SCHEDULE E
THE MATERIAL TRANSACTIONS RESOLUTION
BE IT RESOLVED, as an ordinary resolution, that the board
of directors of the Corporation consider and, if thought
appropriate, amend the charter of the board of directors of the
Corporation (the "Board Charter") as follows:
(a) by adding the following
section after "Mandate and Stewardship of the Corporation" and
before "Board Renewal" in the Board Charter:
"Approval of Material Transactions
In the event that the Corporation is a party to any transaction
(a "Transaction") involving the disposition or
acquisition of assets with a fair market value equal to or greater
than 10% of the total book value of the Corporation's assets at
that time (the "Transaction Threshold"), the Board
shall submit the Transaction for approval of the shareholders by
majority resolution at a meeting of the shareholders held in
compliance with the Business Corporations Act (Yukon) and applicable securities laws. The
Board will review and establish the appropriate Transaction
Threshold on an annual basis."
SCHEDULE F
THE DISCLOSURE POLICY RESOLUTION
BE IT RESOLVED, as an ordinary resolution, that the board
of directors of the Corporation consider and, if thought
appropriate, amend the charter of the board of directors of the
Corporation (the "Board Charter") as follows:
(a) by deleting the text of the
section of the Board Charter entitled "Communication to
Shareholders" and replacing it with the following:
"The Board of Directors have a responsibility to have
appropriate procedures in place so that accurate, appropriate and
timely disclosure is being made to the Corporation's shareholders
and to the public. Therefore, the Board must prepare,
maintain in effect at all times and rigorously comply in all
respects with a policy regarding effective communication with its
shareholders and the public that is consistent with best corporate
governance practices, provides opportunity for significant input by
independent directors into Board decisions on public disclosures,
and ensures that shareholders and the public are provided
sufficient detailed information by the Corporation to understand
fully the exploration and development status of the Corporation's
onshore licenses and development assets in the Papua New Guinea jungle (the "Disclosure
Policy"). On an annual basis, the Board must review
(and to the extent required to comply with the preceding sentence,
update) the Disclosure Policy, and report in reasonable detail to
the Corporation's shareholders on the Corporation's practices and
procedures in place to ensure compliance with the Disclosure
Policy. The Disclosure Policy shall be made available on the
Corporation's website in addition to all other required
disclosures."
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SOURCE Petroleum Independent & Exploration, LLC