- The current Board and management have destroyed significant
shareholder value
- The current Board has failed to provide effective management
oversight and has adopted a flawed managerial and operational
structure
- Vote the BLUE proxy to elect the Concerned InterOil
Shareholders' five highly qualified nominees and vote FOR each of
the six proposed resolutions
HOUSTON, TX, May 17, 2016 /PRNewswire/ - The founding
shareholder, former chairman and Chief Executive Officer of
InterOil Corporation ("InterOil" or the "Company") (NYSE: IOC),
Phil Mulacek, and Petroleum
Independent & Exploration, LLC ("PIE Corp.") (together, the
"Concerned InterOil Shareholders"), announced today that they have
issued a letter to InterOil shareholders and filed their proxy
circular in connection with the annual and special meeting of
shareholders of InterOil, to be held in New York on June 14, 2016 (the
"Meeting").
The Concerned InterOil Shareholders will mail proxy materials to
shareholders in connection with the Meeting. Shareholders are
encouraged to carefully review those materials. InterOil
shareholders are urged to discard any materials received from
management, and vote only on the BLUE Concerned InterOil
Shareholders proxy or voting instruction form.
Shareholders are encouraged to vote only the BLUE
Concerned InterOil Shareholders proxy:
- FOR the Requisition Resolutions;
- FOR each of our five of our highly-qualified
nominees;
- FOR the appointment of auditors;
- AGAINST the New Plan Resolution; and
- AGAINST the Mulacek Expenses Denial Resolution.
A copy of the letter and proxy circular is available at
http://www.concernedinteroilshareholders.com and also on InterOil's
company profile on SEDAR at http://www.sedar.com.
The full text of the letter follows:
May 16, 2016
Dear Fellow Shareholders:
Our investment in InterOil is at risk!
The current board of directors (the "Board") of InterOil
Corporation ("InterOil" or the "Company") has presided over a
massive destruction of shareholder value. We believe that the
current Board has failed to provide effective oversight of
management and has adopted a flawed managerial and operational
structure, which has significantly damaged the interests of
InterOil's shareholders and jeopardized the future of the Company.
As you may know, I am the founder and former Chairman and CEO of
InterOil. Petroleum Independent & Exploration, LLC and I (the
"Concerned InterOil Shareholders" or "we"), together with other
shareholders concerned about InterOil's future and representing in
total approximately 7.5% of the outstanding shares of the Company,
requisitioned a special meeting of shareholders (the "Requisition")
under the Business Corporations Act (Yukon) (the corporate statute governing
InterOil) in March 2016 seeking to
improve the corporate governance of InterOil.
Since my retirement from the Board in November 2013, InterOil's share price has
declined by US$60. We believe
that the current Board has failed InterOil's shareholders in
several critical ways, which have led to a substantial destruction
of shareholder value. Among other things we believe:
- The Board pursued value destructive transactions without
seeking shareholder approval, including the sale of more than half
of InterOil's gross interest in the Elk and Antelope gas fields to
TOTAL, S.A. ("TOTAL"). We believe that the over 50% decline in the
InterOil share price in the six weeks following the announcement of
the transaction, wiping out approximately US$2.5 billion in
shareholder value, was a direct investor reaction to the terms of
that transaction.
- The Board has consistently proven that it lacks needed
expertise and understanding of exploration and development
operations in Papua New Guinea,
which has led to cost overruns, repeated operational failures and
high and increasing debt levels for the Company.
- The Board is taking a destructive short-term view of InterOil's
business, sacrificing long-term shareholder value by allowing
management to dispose of assets at fire-sale prices, destroy useful
equipment and dismiss hundreds of recently hired and trained
employees.
- The Board has failed to disclose developments to shareholders
that we believe to be material, and has emphasized non-material
announcements to provide the appearance of progress for the
Company.
- Compensation levels of the Board and management are far out of
scale for a company like InterOil, which has no net revenue from
upstream operations and no operatorship of PRL 15 (Elk and Antelope
fields) or other material lease operations. The worst example of
this is the abusive "golden parachute" payment due to the CEO in
the event of a change in control of the Company.
- The interests of current directors are not aligned with the
interests of shareholders. Most of the InterOil shares owned by
current directors were received as share grants from the Company,
and not from purchases made with their own funds.
- The Board has provided minimal disclosure to shareholders on
important matters about operations and assets based on a flawed and
inconsistent measure of "materiality". We believe that the Board is
using a disclosure standard and thresholds more appropriate to a
"super-major" with billions of dollars in revenue from a broad
portfolio of assets, which is not appropriate for a company like
InterOil that has no operations, no revenues and a single large
asset that accounts for a vast majority of its value. This
disclosure policy has left shareholders without the ability to
accurately judge the value or performance of their investment and
the Board's stewardship of the Company and oversight of
management.
SOMEONE HAD TO ACT TO PROTECT SHAREHOLDERS
I have tried over the past two years to open a private dialog
with the Board and management to offer my advice on drilling and
related matters based on my long experience in Papua New Guinea. However, management
failed to engage meaningfully on any of the issues I raised.
Finally, in the first quarter of this year, frustrated with the
poor decision-making of the Board and management and InterOil
common share prices below US$25.00,
the Concerned InterOil Shareholders and certain other shareholders
issued the Requisition in order to introduce a series of
resolutions (described in greater detail below) designed to promote
improved corporate governance practices for the benefit of the
Company and its shareholders (the "Requisition Resolutions"). The
Board initially refused to even acknowledge and disclose our lawful
Requisition, which forced us to seek redress from the Supreme Court
of Yukon, at our own expense, to
compel the Board to act on the Requisition and bring the
Requisition Resolutions to a vote at the annual and special meeting
of the shareholders of InterOil to be held on June 14, 2016 (the "Meeting").
The Requisition Resolutions (stated and described in full in our
information circular) are reasonable proposals intended to make the
Board accountable to shareholders, improve the composition of
operational and management skills on the Board, align the Board's
interests with shareholders, and introduce basic corporate
governance practices, including more complete disclosure. It
is appalling to us that the Board wishes to deny basic rights to
shareholders by opposing and actively soliciting votes against
every single one of the Requisition Resolutions.
THE BOARD OPPOSES EACH OF OUR REQUISITION RESOLUTIONS, WHICH
WOULD:
- Compel the Board to seek shareholder approval of material
transactions that involve more than 10% of the Company's total
asset value (the "Material Transactions Resolution").
Our
objective is to ensure that the current Board's track record of
entering into value destructive transactions without shareholder
approval cannot continue and that directors are held accountable
for all such transactions.
- Require that at least one-third of Board members are
individuals with direct operating experience in exploration and
development onshore in remote jungle areas.
The Board
must have the necessary expertise to be able to provide effective
oversight of management so that the Company can avoid repeating the
poor managerial decision-making that has plagued InterOil since I
retired as CEO of InterOil.
- Require third party analysis to support discovery
announcements and evaluate the commercial potential of the
Company's assets.
To promote transparency and
accountability, the Board must provide accurate and independently
verified reserves information to the public and shareholders, and
the Board and management must be prevented from misstating the
significance of "discoveries".
- Compel the Board to develop and vigorously enforce a
disclosure policy that exceeds the regulatory minimum.
Shareholders deserve a full and complete understanding of their
investment based on a policy of full disclosure instead of minimum
compliance with required standards.
- Require a threshold price per share as a condition to any
change of control payments to management; limit aggregate Board
cash compensation to US$600,000 per
year; and restrict the sale of equity grants received by directors
for a year after their service ends.
The Board must be
aligned with shareholders and incentivized to act in the long term
best interests of the Company. We also want to ensure that the
Board and management seek the best price for InterOil in the event
of a sale of the Company, and only benefit if shareholders also
benefit.
The Board's baffling opposition to measures intended to remedy
the unaccountability and poor decision-making processes that have
led to a significant deterioration in the health of the Company and
destruction of shareholder value troubles us and has led us to
believe that even if the Requisition Resolutions are passed, the
current Board will not make a good faith attempt to implement
them.
THE CONCERNED INTEROIL SHAREHOLDERS HAVE CONCLUDED THAT THE
ONLY WAY TO ENSURE THAT THE REQUISITION RESOLUTIONS ARE IMPLEMENTED
IS TO NOMINATE FIVE HIGHLY-QUALIFIED INDIVIDUALS TO THE
BOARD.
Our nominees for election as directors of the Company are
myself, Mr. David Lasco, Mr.
David Vance, Mr. George Cammon and Mr. Olen Overstreet. We are all highly
qualified and would bring much-needed shareholder-focused
representation to the Board. Each of us would also bring capital
allocation and operational expertise, along with deep
industry-specific experience, to the Board, all of which are
currently lacking and desperately required in order to improve the
health of the Company.
Fellow shareholders, at the Meeting we have an opportunity to
begin to correct what we believe to be the wasteful expenditure and
serious mismanagement of the Company's resources by InterOil's
current Board and management. We have proposed resolutions intended
to increase transparency and align the Board and management
compensation with shareholder value creation. We have further
proposed five extremely qualified individuals to help implement
those resolutions and restore InterOil's value and well-being.
We believe if properly managed, InterOil still has the potential
to create billions of dollars in value for shareholders, and we
strongly urge all shareholders to vote the BLUE Concerned
InterOil Shareholder proxy to adopt our Requisition Resolutions to
promote transparency and accountability of the Board to
shareholders and elect all five of our nominees as directors of the
Company.
If you require any assistance voting your BLUE proxy,
contact the Concerned InterOil Shareholders' proxy solicitor,
Evolution Proxy Inc., at 1-844-226-3222 toll-free in North America, or at 416-855-0238 outside of
North America (collect calls
accepted), or by e-mail at info@evolutionproxy.com.
For more information, please also visit
www.concernedinteroilshareholders.com.
In the following pages we outline the urgent case for change and
our plan, and describe each of our Requisition Resolutions and the
backgrounds of each of our nominees.
Sincerely,
"Phil E. Mulacek"
Phil Mulacek
Shareholder, Founder and Former Chairman and CEO
of InterOil Corporation
The Concerned InterOil Shareholders will mail proxy materials
to shareholders in connection with the upcoming meeting.
Shareholders are encouraged to carefully review those materials.
InterOil shareholders are urged to discard any materials received
from management, and vote only on the BLUE Concerned InterOil
Shareholders proxy or voting instruction form.
Shareholders are encouraged to vote only the BLUE Concerned
InterOil Shareholders proxy:
- FOR the Proposed Resolutions;
- FOR each of our five of our highly-qualified
nominees;
- FOR the appointment of auditors;
- AGAINST the New Plan Resolution; and
- AGAINST the Mulacek Expenses Denial
Resolution.
If you require any assistance voting your BLUE proxy, contact
the Concerned InterOil Shareholders' proxy solicitor, Evolution
Proxy Inc., at 1-844-226-3222 toll-free in North America, or at 416-855-0238 outside of
North America (collect calls
accepted), or by e-mail at
info@evolutionproxy.com.
Advisors:
The Concerned InterOil Shareholders have retained Wildeboer
Dellelce LLP and Taft Stettinius & Hollister LLP as its legal
advisors, Evolution Proxy, Inc. as its proxy solicitor, and
Bayfield Strategy as its strategic communications advisor in
connection with this matter.
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 please contact
the Concerned InterOil Shareholders at +1 (832) 510-7028, or by
email at info@concernedinteroilshareholders.com
Shareholder Contact:
For assistance in voting your proxy, please contact Evolution
Proxy Inc., at 1-844-226-3222 toll-free in North America, or at 416-855-0238 outside of
North America (collect calls
accepted), or by e-mail at info@evolutionproxy.com
Media Contact:
Bayfield Strategy, Inc.
Riyaz Lalani
+1 (416) 907-9365
rlalani@bayfieldstrategy.com
SOURCE Petroleum Independent & Exploration, LLC