- The Offer has been extended to February 5, 2016
- Intends to file an application with ASC to cease trade the shareholder rights plan
- All-Cash Offer of Cdn$0.17 provides immediate and certain value for shareholders
- Ironhorse Board continues to fail to present shareholders with any alternate options to maximize shareholder value
CALGARY, Dec. 17, 2015 /CNW/ – 1927297 Alberta Ltd. (the “Offeror“) announced today that it has extended its previously announced offer (the “Offer“) to purchase all of the outstanding common shares (the “Shares“) of Ironhorse Oil & Gas Inc. (TSXV:IOG) (“Ironhorse“) for Cdn$0.17 in cash per Share, subject to certain terms and conditions, until 4:00 p.m. (Calgary time) on February 5, 2016. The Offeror will file a corresponding notice of variation (the “Notice of Variation“) to formally extend the expiry time of its Offer until 4:00 p.m. (Calgary time) on February 5, 2016.
The Offeror also announced that it intends to file an application with the Alberta Securities Commission (the “ASC“) to cease trade the tactical shareholder rights plan adopted by Ironhorse in response to the Offer.
No Plan to Maximize Shareholder Value
On April 16, 2015, over 200 days ago, the Ironhorse Board announced that a special committee of directors had been formed and would engage a financial advisor to review options to maximize shareholder value. No alternate options to maximize value, including strategic alternatives such as a merger or sale of Ironhorse, have been presented to date.
Overvaluation of Ironhorse's Reserves and Future Outlook
The Offeror believes that the financial opinion of Ironhorse's financial advisor is flawed as the opinion only relied on outdated financial statements and management's discussion and analysis for the years ended December 31, 2014 and 2013. No updated analysis on Ironhorse's reserve and estimated future net revenues was done by the advisor and the most recent analysis that the advisor relied upon was made prior to the current significant and prolonged decrease in the oil price. The impairment of approximately $3,500,000 reported in the September 30, 2015 financial statements may be just the beginning of the reserves devaluation with current prices substantially lower than that of the prior quarter.
Ironhorse Board Not Aligned with Shareholders
The Offeror believes that the board of directors of Ironhorse (the “Ironhorse Board“) is attempting to protect management from a change in control that would reduce or eliminate the annual cash compensation paid to management. All officers of Ironhorse are also employees of Grizzly Resources Ltd. (“Grizzly“). Such officers' services are provided to Ironhorse pursuant to a management agreement between Ironhorse and Grizzly, under which Ironhorse pays to Grizzly a monthly management fee. Larry J. Parks, President and Chief Executive Officer and a director of Ironhorse is also the President and Chief Executive Officer of Grizzly.
The Offer Benefits Shareholders
The Offer announced by the Offeror on November 3, 2015 represents the following benefits for holders of Ironhorse Shares (“Shareholders“):
1) Significant Premium and Immediate Value
The all-cash consideration provides Shareholders with the opportunity to realize an immediate and certain value for their Shares. The Offer price of $0.17 per Share represents a premium of approximately 55% to the last closing price of the Shares on the TSXV ($0.11) on November 2, 2015, the last trading day prior to the date of the announcement of the Offeror's intention to make the Offer, and a premium of approximately 45% to the volume-weighted average price of the Shares over the 90 day period ended on November 2, 2015. The closing price of the Shares on December 16, 2015 was $0.115.
2) Immediate Liquidity
The Offer represents an attractive liquidity event for Shareholders in a thinly-traded stock. Shareholders currently have limited liquidity based on the trading history of the Shares, and the fully-funded Offer provides an opportunity for Shareholders to dispose of all of their Shares for cash consideration.
3) Fully-Financed All-Cash Offer
The Offer is NOT subject to obtaining any financing and the Offeror, through its own resources and those to be provided by its affiliates, has available sufficient funds to pay the entire consideration for the Shares.
4) Eliminate Exposure to Potential Decrease in the Price of Shares
Due to the continued decline in the price of oil, with many analysts expecting a longer price recovery period and lower long-term oil price outlook than was expected last year, the revaluation of Ironhorse's reserves to be filed by Ironhorse for the year ended December 31, 2015 is expected to be based on a further decreased estimated future net revenues, leading to a potential decrease in the stated value of Ironhorse's reserves. Such a decline in the stated value of Ironhorse's reserves could be expected to cause a decline in the price of the Shares.
The Offer will remain open for acceptance until 4:00 p.m. (Calgary time) on February 5, 2016, unless extended or withdrawn by the Offeror. Full details of the Offer are set out in the take-over bid circular, related Offer documents and the Notice of Variation.
This News Release shall not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of these securities in any jurisdiction in which such an offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction.