CALGARY, Nov. 19, 2015 /CNW/ – Ironhorse Oil & Gas Inc. (“Ironhorse” or the “Company”) (TSX-V:IOG), announces that its board of directors (the “Board”) has unanimously recommended that Ironhorse shareholders REJECT the unsolicited offer from 1927297 Alberta Ltd. (the “Offeror”), a corporation wholly-owned by Timmerman Trust, commenced on November 4, 2015 to acquire the issued and outstanding common shares of Ironhorse (“Common Shares”) at $0.17 per share in cash (the “Offer”).
Reasons to Reject the Offer
The Board has carefully reviewed and considered the Offer with the benefit of advice from its financial and legal advisors. The following is a summary of the principal reasons for the unanimous recommendation of the Board to shareholders that they REJECT the Offer and NOT TENDER their Common Shares to the Offer.
1. The Offer is not supported by Ironhorse’s largest shareholders or its directors and officers holding approximately 45% of the outstanding Common Shares.
2. The Offer is highly conditional and has substantial completion risk.
3. The Offer significantly undervalues Ironhorse’s assets and growth potential.
As at June 30, 2015, Ironhorse had $3.0 million of net working capital on its balance sheet with no debt. Based on the offer price of $0.17 per Common Share, the Offer attributes only $1.7 million in value to the Company’s oil and gas assets, notwithstanding average daily production (Company’s share) of 215 bbl/d light oil and natural gas liquids and 233 mcf/d natural gas in the quarter ended June 30, 2015. This not only significantly undervalues the intrinsic production and reserves value of Ironhorse’s high quality oil and gas assets but deprives shareholders of the opportunity to participate in the upside potential of Ironhorse’s assets upon a recovery in commodity prices.
As at December 31, 2014, Ironhorse’s aggregate petroleum and natural gas reserves and before tax net present value of future net revenue from those reserves discounted at 10% (“NPV10”) as evaluated by the Company’s independent reserves evaluators were as follows:
Ironhorse’s well and facility capabilities are 390 boe/d. The cost per flowing barrel of the Offer, based on capability is therefore only approximately $4,350, which is significantly lower than comparable transactional values.
4. The Offer is predatory and opportunistic.
5. Superior proposals or other alternatives may emerge.
6. Ironhorse’s financial advisor has delivered a written opinion that the Offer is inadequate.
7. The Offer provides insufficient time to properly consider any take-over bid made for Ironhorse.
Directors’ Circular
A directors’ circular of Ironhorse dated November 19, 2015 (the “Directors’ Circular”) in response to the Offer has been mailed to each of Ironhorse’s shareholders in compliance with applicable securities laws and filed with Canadian securities regulatory authorities. The Directors’ Circular is available on SEDAR at www.sedar.com. Shareholders are advised to read the Directors’ Circular carefully and in its entirety, as it contains important information regarding Ironhorse and the Offer.
If shareholders of Ironhorse have any questions or require more information, they are encouraged to contact D.F. King Canada (“D.F. King”), a division of CST Investor Services Inc., the information agent retained by Ironhorse, by telephone at 1-800-294-3174 (Toll Free in North America) or 1-201-806-7301 (Banks, Brokers and Collect Calls), or by email at inquiries@dfking.com.
How to REJECT the Offer and Withdraw Tendered Shares
To reject the Offer, you should do nothing. The Offer is open for acceptance until December 18, 2015, unless extended. Shareholders who have already tendered their Common Shares to the Offer can withdraw them at any time before they have been taken up by the Offeror and in certain other circumstances as further described under the heading “How to Withdrawn Your Deposited Common Shares” in the Directors’ Circular. Shareholders holding shares through a dealer, broker or other nominee should contact such dealer, broker or nominee to withdraw their Common Shares. Shareholders may also contact D.F. King by telephone at 1-800-294-3174 (Toll Free in North America) or 1-201-806-7301 (Banks, Brokers and Collect Calls), or by email at inquiries@dfking.com.
If you have already tendered Common Shares to the Offer and you decide to withdraw these Common Shares from the Offer, you must allow sufficient time to complete the withdrawal process prior to the expiry of the Offer.
[expand title=”Advisories & Contact”]Advisories
Forward-Looking Statements
This news release, including the discussion of the reasons for the Board’s unanimous recommendation that shareholders reject the Offer and not tender their Common Shares, contains forward-looking information (as defined in the Securities Act (Alberta)) and statements (collectively, “forward-looking statements”) that are based on expectations, estimates and projections as of the date of this news release. These forward-looking statements can often, but not always, be identified by the use of forward-looking terminology such as “plans”, “predicts”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases, or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. Examples of such forward-looking statements in this news release include, but are not limited to, the quantity of reserves; future trading prices of the Common Shares; future commodity prices; and whether or not an alternative transaction superior to the Offer may emerge. Statements relating to “reserves” are deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions that the reserves described can be profitably produced in the future. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this news release. Forward-looking statements contained in this news release are based on a number of assumptions that may prove to be incorrect, including, but not limited to assumptions as to production, operating expenses, capital expenditures and oil prices; competitive conditions in the oil and gas industry; general economic conditions; changes in laws, rules and regulations applicable to Ironhorse; estimates of reserves; and whether or not an alternative transaction superior to the Offer may emerge. In addition to being subject to a number of assumptions, forward-looking statements in this news release involve known and unknown risks, uncertainties and other factors that may cause actual results and developments to be materially different from those expressed or implied by such forward-looking statements, including, but not limited to: volatility of crude oil and natural gas prices; the impacts of legislative and regulatory changes especially those which relate to royalties, taxation and the environment; various events which could disrupt operations; operational issues and contractual issues; uncertainty of estimates with respect to reserves; the supply and demand metrics for oil and natural gas; the variances of stock market activities generally; currency and interest rate fluctuations; Ironhorse’s inability to either generate sufficient cash flow from operations to meet its current and future obligations or obtain external sources of debt and equity capital; general economic, business and market conditions; and such other risks and uncertainties identified in the filings by Ironhorse with the Canadian provincial securities regulatory authorities. The Board believes that the expectations reflected in the forward-looking statements contained in this news release are reasonable as at the date hereof, but no assurance can be given that these expectations will prove to be correct. In addition, although Ironhorse and the Board have attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. Accordingly, you should not place undue reliance on any forward-looking statements contained in this news release. Except as required by law, neither the Board nor Ironhorse undertakes any obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this news release are expressly qualified by this cautionary statement.
Oil and Gas Advisories
Readers are cautioned that estimated values of future net revenue contained in this news release do not represent the fair market value of reserves. This news release makes reference to barrels of oil equivalent (boe). Boe’s may be misleading, particularly if used in isolation. A boe conversion ratio of 1 boe for 6 mcf of natural gas is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE Ironhorse Oil & Gas Inc.
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