SINGAPORE and PORT MORESBY, Papua New Guinea, May 26, 2016 /PRNewswire/ -- InterOil Corporation
(NYSE: IOC; POMSoX: IOC) has mailed a letter to shareholders urging
shareholders to vote for its highly qualified nominees on the WHITE
proxy in connection with the Corporation's upcoming Annual and
Special Meeting of Shareholders (the "Meeting") to be held on
June 14, 2016. InterOil shareholders
of record at the close of business on April
25, 2016 are entitled to vote at the Meeting. All proxies
must be received before 8:00 PM ET on
June 10, 2016.
The letter and other materials regarding the Board of Directors'
recommendation for the Meeting are available online at
www.interoil.com/agm2016, www.sedar.com and www.sec.gov.
Highlights of the letter include:
- InterOil's Board has transformed InterOil and is delivering to
shareholders the opportunity to participate in the potential
immediate and long-term value upside of InterOil's combination with
Oil Search Limited ("Oil Search");
- Mr. Mulacek's assertions regarding the proposed transaction
with Oil Search are factually incorrect;
- Shareholders should not be misled by Mulacek agenda's to take
control of InterOil.
The Board urges shareholders to reject the dissident agenda by
voting today on the WHITE proxy as recommended by the
Board.
The full text of the letter follows:
Dear InterOil Shareholders
At InterOil's Annual and Special Meeting of Shareholders to be
held on June 14, 2016 (the "Meeting")
you are being asked to make a simple choice. You can vote
for:
- InterOil's Board of Directors and management team, who have
taken decisive actions and enabled InterOil to enter into a premium
transaction with Oil Search Limited ("Oil Search") that is expected
to deliver significant value to all InterOil shareholders.
OR
- Phil Mulacek and his agenda to
take back control of InterOil.
To us, the choice is clear: don't let Mr. Mulacek and his
agenda to control InterOil or interfere with your ability to
participate in InterOil's transaction with Oil Search that is
expected to create value for all shareholders. Vote the
WHITE proxy FOR InterOil's highly qualified director
nominees and to reject Mulacek's resolutions and his hand-picked
and unqualified nominees.
INTEROIL'S BOARD IS DELIVERING THE OPPORTUNITY
TO PARTICIPATE IN THE POTENTIAL IMMEDIATE AND LONG-TERM VALUE
UPSIDE OF INTEROIL'S COMBINATION WITH OIL SEARCH
InterOil has entered into a transaction with Oil Search that is
expected to provide InterOil shareholders ownership in a larger
scale combined entity at a significant premium to the InterOil
share price at the time of the announcement of the transaction,
while maintaining exposure to the value upside from the
certification of Elk-Antelope field contingent resources. We
believe this transaction provides InterOil shareholders with
compelling value through:
- A material and immediate premium.
InterOil shareholders will receive 8.05 Oil Search shares for
each InterOil share they hold, which represents a premium of
27.2% to InterOil's closing price and 32.5% to InterOil
3-month VWAP as of May 19,
2016.[1] Alternatively, InterOil shareholders can receive an
equivalent value in cash up to an aggregate of $770 million.
- An uncapped cash payment based on the upside of the
Elk-Antelope field. InterOil shareholders will receive a
Contingent Value Right ("CVR"), which will pay $6.05 in cash per InterOil share for each tcfe
above 6.2 tcfe gross 2C certified contingent resources in the
Elk-Antelope field, on receipt by Oil Search of the certification
payment. This cash payment will allow InterOil shareholders to
benefit from any upside resulting from the certification of
Elk-Antelope.
- Participation in the benefits of a complementary combined
company. The combined company will have enhanced scale, a
high quality, low cost production base and balance sheet strength
that is expected to permit the combined company to capitalize on
long-term growth opportunities. The transaction also provides
InterOil shareholders with an interest in the PNG LNG project and
the significant potential benefits that are expected to be realised
from cooperation between and the potential integration of the PNG
LNG and the Papua LNG projects.
By voting the WHITE proxy as recommended by
your Board, you can show your support for InterOil's Board and
management team that has orchestrated this transaction, which it
believes delivers significant value to all InterOil
shareholders.
YOUR BOARD AND MANAGEMENT TEAM TRANSFORMED
INTEROIL AND FACILITATED THIS TRANSACTION
Our value delivering transaction with Oil Search is the result
of efforts by your Board and management team to address the
challenges Mr. Mulacek created before he left InterOil in 2013 and
to put InterOil on track to unlock the value of its assets. These
actions included, among other things, revamping the Board and
management team, continuing exploration and reducing costs.
As part of these efforts, in August
2015, your Board began exploring opportunities to monetize
the corporation's interests in PRL15, the Raptor, Bobcat and
Triceratops discoveries and the Corporation's exploration
licenses. In addition, on its third and fourth quarter 2015
earnings calls, InterOil disclosed that it was already in
discussions with various strategic parties regarding the
potential sale of assets.
In the first quarter of 2016, InterOil received unsolicited
conditional proposals to acquire the entire Corporation from
several parties, including Oil Search. Throughout this
timeframe, your Board thoroughly considered all options, engaged
with each of the parties that made unsolicited proposals to acquire
the Corporation and ultimately determined that the transaction with
Oil Search creates the most value for shareholders of the various
alternatives then available. Additional details about
the sale process will be provided in proxy materials that will be
mailed in connection with a special meeting of shareholders to vote
on the transaction. This special meeting of shareholders will be
held after the Annual Meeting on a date yet to be
advised.
Under Mr. Mulacek, InterOil had no clearly articulated strategy
and the projects he pursued conflicted with InterOil's
agreement with the Papua New Guinea Government. In fact, as a
result of these projects, the PNG Government commenced action
against InterOil to terminate the agreement and InterOil's
license over the Elk-Antelope field. Moreover, Mr. Mulacek was
unable to execute a transaction to monetize the Corporation's
assets.
We believe that it is only because of actions taken by
InterOil's current Board and management team that InterOil was able
to execute its strategy and ultimately enter into the Oil Search
transaction.
DON'T BE MISLED BY MULACEK: THE OIL SEARCH
TRANSACTION DELIVERS SIGNIFICANT VALUE TO INTEROIL
SHAREHOLDERS
In an attempt to further its agenda and derail our transaction
with Oil Search, Mr. Mulacek has criticized the transaction by
throwing out arbitrary and unrealistic numbers and mischaracterized
the process by which shareholders have the opportunity to vote on
the transaction.
Here are the facts:
- FACT: The CVR provides InterOil shareholders with uncapped
upside to Elk-Antelope. The CVR entitles InterOil
shareholders to directly receive an uncapped cash payment based the
Elk-Antelope gross certified 2C resources above 6.2 tcfe.
- FACT: The limits of the Elk-Antelope fields are understood
and any remaining uncertainty should be addressed through the
drilling of Antelope-7. Appraisal of Elk-Antelope is
nearly finished. Significant appraisal work by Total S.A.
("Total"), Oil Search and InterOil has been completed with respect
to the Elk-Antelope fields. Accordingly, the limits of the fields
are well understood, with the main upside uncertainty relating to
the western flank of Antelope. Total, Oil Search and InterOil have
agreed to drill Antelope-7 to help delineate the field and use the
results in the resource certification process. Certification
is currently expected by mid-2017.
- FACT: Mulacek's statements about the resource size are
unreasonable and not reflective of any market commentary other than
his own. Mr. Mulacek continues to speculate and throw out
unsubstantiated numbers about the size of the Elk-Antelope resource
without supporting data and which do not reflect reasonable
independent assessment or market commentary. The low
end of Mr. Mulacek's estimate range is well above the
estimates provided through our independent resources
certifier. However, should Mr. Mulacek's estimates come to
fruition, we believe that InterOil shareholders will receive
material value through the CVR and by owning shares of the combined
company.
- FACT: The Oil Search transaction contemplates completion of
the CVR payments by mid-2017. As we understand it, Mr.
Mulacek's proposal to delay resource payments until two years of
stable LNG production would likely delay resource payments by
almost a decade, after completion of front-end engineering and
design, a final investment decision, construction and then
operation of the plant.
- FACT: Shareholders will have a separate opportunity to vote
on the Oil Search transaction. Do not be misled
- the Annual and Special Meeting on June 14, 2016 is to vote on Mulacek's resolutions
and his handpicked nominees, as well as the Company's regular
annual business, not on the Oil Search transaction.
Shareholders will have the opportunity to vote on the Oil Search
transaction at an entirely separate special meeting which is yet to
be scheduled but will be held subsequent to the
Meeting.
The facts are clear – our transaction with Oil Search delivers
significant value to shareholders.
MULACEK'S AGENDA TO TAKE CONTROL OF INTEROIL
IS NOT IN THE BEST INTEREST OF ALL SHAREHOLDERS
Despite InterOil's announcement of a value creating transaction
with Oil Search, Mr. Mulacek and certain of his associates
(together "Mulacek") have continued their campaign to take control
of InterOil.
To achieve his self-serving agenda to take control of InterOil's
Board and thus InterOil's future, Mr. Mulacek is seeking to reduce
the number of directors on the Board to six, and is nominating
himself and four of his employees and business associates for
election to the Corporation's Board. Your Board of Directors has
thoroughly reviewed Mulacek's resolutions and his nominees for
election and determined that they are not in the best interest of
InterOil or its shareholders. Specifically, your Board
considered that:
x Mulacek has not
articulated a clear strategy to create value for InterOil
shareholders.
x Mr. Mulacek has a track
record of litigation that damaged InterOil's reputation and
threatened the Corporation. In addition, during his tenure as
CEO, the Corporation failed to maintain adequate internal
controls.
x Mr. Mulacek has material
conflicts of interest stemming from his investment in Kina
Petroleum, having one of his nominees sit on the Kina Board and his
role as president of a separate entity that holds interests in
certain InterOil assets. Moreover, following Mr. Mulacek's
large investment in Kina, its stock price has deteriorated and has
caused significant shareholder value destruction.
x Mulacek's nominees are not
independent of Mr. Mulacek – in fact, ALL of them have at one time
worked for or conducted business with Mr. Mulacek – and we
believe they would take actions intended to further Mr. Mulacek's
personal agenda, instead of acting in the best interest of all
InterOil shareholders.
x Mulacek's nominees are not
qualified to serve on the Board, and in particular, three of them
have no experience serving on a public company board.
VOTE ON THE WHITE PROXY TO PRESERVE THE
POTENTIAL TO REALIZE THE VALUE OF THE OIL SEARCH
TRANSACTION
Your Board and management team have positioned InterOil
shareholders to reap the expected benefits of our transaction with
Oil Search. Don't let Mulacek and his potentially
self-serving agenda prevent this from happening.
By voting on the enclosed WHITE proxy you can enable us
to move forward with this transaction and deliver the potential
value to all InterOil shareholders. We also urge you to
reject the Mulacek agenda, and to discard any proxy materials you
may receive from Mulacek in the mail.
Vote TODAY online, by telephone or by signing and dating the
enclosed WHITE proxy and returning it in the enclosed
postage-paid envelope by 8:00PM ET on June 10, 2016.
On behalf of your Board and the management, thank you for your
continued support.
Sincerely,
Chris
Finlayson
|
Dr Michael
Hession
|
Chairman
|
Chief Executive
Officer
|
THE BOARD AND
MANAGEMENT OF INTEROIL CORPORATION UNANIMOUSLY RECOMMEND VOTING
ONLY THE ENCLOSED WHITE PROXY FORM:
|
|
AGAINST
|
|
EACH of the DISSIDENT
RESOLUTIONS
|
FOR
|
|
The Election of ALL
OF the INTEROIL NOMINEES TO THE BOARD
|
FOR
|
|
THE APPROVAL OF THE
2016 STOCK INCENTIVE PLAN
|
FOR
|
|
THE APPOINTMENT OF
Pricewaterhousecoopers, chartered accountants as our
auditors
|
FOR
|
|
THE rejection OF THE
mulacek expenses
|
|
|
|
YOUR WHITE PROXY
MUST BE RECEIVED BY COMPUTERSHARE INVESTOR SERVICES INC. OR
MACKENZIE PARTNERS, INC. BEFORE 8:00 P.M. (EASTERN TIME) ON JUNE
10, 2016.
|
If you have any questions, require assistance
with
voting your WHITE
proxy card or need additional copies of the proxy materials, please
contact:
MACKENZIE PARTNERS,
INC.
105 Madison Avenue
New York, NY 10016
iocproxy@
mackenziepartners.com
(212) 929-5500 (Call Collect)
Or
TOLL-FREE (800) 322-2885
About InterOil
InterOil Corporation is an independent oil and gas business with
a sole focus on Papua New Guinea.
InterOil's assets include one of Asia's largest undeveloped gas fields,
Elk-Antelope, in the Gulf Province, and exploration licenses
covering about 16,000sqkm. Its main offices are in Singapore and Port
Moresby. InterOil is listed on the New York and Port
Moresby stock exchanges.
Investor Contacts
Singapore
|
Singapore
|
United
States
|
Michael
Lynn
Senior Vice
President
Investor
Relations
|
David Wu
Vice
President
Investor
Relations
|
Cynthia
Black
Investor
Relations
North
America
|
T: +65 6507
0222
E:
michael.lynn@interoil.com
|
T: +65 6507
0222
E:
david.wu@interoil.com
|
T: +1 212 653
9778
E:
cynthia.black@interoil.com
|
Media Contacts
Singapore
|
United
States
|
Ann Lee
Communications
Specialist
|
James Golden/ Aaron
Palash
Joele Frank,
Wilkinson Brimmer Katcher
|
T: +65 6507
0222
E:
ann.lee@interoil.com
|
T: +1 212 355
4449
E:
ioc-jf@joelefrank.com
|
Legal Notice
None of the securities anticipated to be issued pursuant to the
Plan of Arrangement with Oil Search Limited have been or will be
registered under the United States Securities Act of 1933, as
amended (the "U.S. Securities Act"), or any state securities laws,
and any securities issued in the transaction with Oil Search
Limited (the "Arrangement") are anticipated to be issued in
reliance upon available exemptions from such registration
requirements pursuant to Section 3(a)(10) of the U.S. Securities
Act and applicable exemptions under state securities laws. This
release does not constitute an offer to sell or the solicitation of
an offer to buy any securities. There can be no assurance that the
Arrangement will occur. The proposed Arrangement is subject to
certain approvals and the fulfilment of certain conditions, and
there can be no assurance that any such approvals will be obtained
and/or any such conditions will be met. Further details regarding
the terms of the transaction are set out in the Arrangement
Agreement and will be provided in a management information circular
which will be available under the profile of InterOil Corporation
at www.sedar.com.
Forward Looking Statements
This release includes "forward-looking statements". All
statements, other than statements of historical facts, included in
this release are forward-looking statements. These statements are
based on the current belief of InterOil, as well as assumptions
made by, and information currently available to InterOil. No
assurances can be given however, that these events will occur.
Actual results could differ, and the difference may be material and
adverse to the combined company and its shareholders. Such
statements are subject to a number of assumptions, risks and
uncertainties, many of which are beyond the control of the
InterOil, which may cause actual results to differ materially from
those implied or expressed by the forward-looking statements. These
include in particular information and statements relating to
InterOil's agreement with Oil Search and the ability to realize the
anticipated benefits, Oil Search's agreement with Total and the
ability to realize the anticipated benefits, the ability to
complete either of the two transactions, either on the anticipated
timeline or at all, the ability to obtain required regulatory and
court approvals for the two transactions, the combined company's
expected growth profile, the anticipated market capitalization of
the combined company, the need to integrate the two companies and
related costs, business disruptions relating from the transactions,
the outcome of any legal proceeding relating to the transactions,
the combined company becoming a leading exploration and production
champion for Papua New Guinea, the
profitability of the combined company, information or statements
relating to resources, hydrocarbon volumes, well test results, the
estimated timing of the LNG project, the timing and quantum of the
certification payment, the costs and break-even prices and
potential revenues of the LNG project, the estimated drilling times
of the exploration or appraisal wells and estimated 2016 budgets
and expenditures, the absence of an established market for natural
gas or gas condensate in Papua New
Guinea and the ability to extract and sell commercially any
natural gas or gas condensate, oil and gas prices, changes in
market demand for oil and gas, currency fluctuations, drilling
results, field performance, the timing of well work-overs and field
development, reserves depletion, fiscal and other governmental
issues and approvals, and the other risk factors discussed in
InterOil's publicly available filings, including but not limited to
those in InterOil's annual report for the year ended December 31, 2015 on Form 40-F and its Annual
Information Form for the year ended December
31, 2015, as well as the risk that Oil Search and Total do
not enter into definitive agreements relating to the MOU between
such parties. InterOil disclaims any intention or obligation to
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as
expressly required by applicable laws.
[1] Based on InterOil's closing price and 3-month VWAP on
May 19, 2016, Oil Search's closing
price on May 19, 2016, and the AUD /
USD exchange rate on May 19,
2016.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/interoil-shareholder-letter-highlights-value-created-by-oil-search-transaction-300275488.html
SOURCE InterOil Corporation