CALGARY, Dec. 21, 2015 /CNW/ – Ironhorse Oil & Gas Inc. (“Ironhorse” or the “Company”) (TSX-V:IOG), advises its shareholders to take no action in response to the extension of 1927297 Alberta Ltd.’s (the “Offeror”) hostile bid to acquire the common shares (“Common Shares”) of Ironhorse at $0.17 per share in cash (the “Offer”). The Offer, as extended, will expire on February 5, 2016. The Offer remains the same, aside from the extension to February 5, 2016. The Offer significantly undervalues Ironhorse’s assets and growth potential. Recent statements made by the Offeror are merely an attempt to conceal the inadequacies of its substantially undervalued, opportunistic and predatory bid for the Company.
The Offeror’s Tactics to Conceal the Inadequacies of the Bid:
- Inaccurate and misleading statements about our financial advisor’s opinion: The Offeror has made inaccurate and misleading statements about the opinion provided by our financial advisor to our board of directors (the “Board”) and included in our Directors’ Circular dated November 19, 2015. As indicated in the opinion, our financial advisor relied on financial statements subsequent to December 31, 2014, including draft interim financial statements for the nine month period ended September 30, 2015 and management’s discussion and analysis related thereto. The Offeror’s statement that our financial advisor relied only on outdated financial statements and management’s discussion and analysis is clearly incorrect and misleading to our shareholders. Furthermore, in assessing the adequacy of the consideration under the Offer to our shareholders our financial advisor mechanically rolled forward the reserves evaluation to September 30, 2015, utilized the strip pricing assumptions as at November 13, 2015, and made use of our actual lease operating statements for 2015.
- Our directors’ and officers’ interests are clearly aligned with shareholders: As a group, our directors and officers hold over 14% of the Common Shares. Our directors and officers interests to maximize shareholder value are clearly well aligned with the interests of our shareholders. The statement made by the Offeror that our Board is trying to protect management from a change of control that would reduce their compensation is misleading. The amounts paid to our officers pursuant to our management agreement with Grizzly Resources Ltd. are not significant and the Board believes that they have no impact on our officers’ interests in maximizing shareholder value. The Board believes that it could not obtain replacement services at similar cost under other arrangements. The misleading and opportunistic actions of the Offeror are resulting in considerable cost and diversion of resources, which the Board believes is not in the interests of Shareholders.
- The Offer significantly undervalues Ironhorse’s assets and growth potential. The Board believes that the Offer fails to adequately compensate shareholders for the value of Ironhorse’s assets, and if successful, would deprive shareholders of Ironhorse’s upside potential. The Board has determined that the Offer is financially inadequate at current oil prices and is an opportunistic attempt by the Offeror to acquire Ironhorse, effectively using Ironhorse’s own cash, at a low point in the energy cycle when Ironhorse has no debt and significant value appreciation with any oil price recovery.
- Superior proposals or other alternatives may emerge. The special committee of the Board (the “Special Committee”) continues to work together with Ironhorse’s management, directors and advisors to evaluate a range of strategic alternatives that may enhance shareholder value. The Board believes that Ironhorse and its assets are potentially attractive to other parties in addition to the Offeror. Alternatives may include, among other things, a sale of the Company for cash and/or shares, asset sales(s), a merger, a reorganization or partnering with a financial or strategic investor. Tendering Common Shares into the Offer before the Special Committee has had an opportunity to fully explore all available alternatives to the Offer may preclude the possibility of a financially superior alternative transaction emerging.
The Facts About the Offer
Shareholders are reminded of the facts about the Offer:
- The Offer is not supported by Ironhorse’s largest shareholders or its directors and officers holding approximately 45% of the outstanding Common Shares
- The directors and officers of Ironhorse, together with a number of shareholders (including certain of Ironhorse’s largest shareholders) have indicated to the Company that they intend to reject the Offer. Such persons hold approximately 45% of the outstanding Common Shares. Accordingly, management believes that the Offer is unlikely to succeed under its current conditions.
- The Offer is highly conditional and has substantial completion risk.
- The Offer is highly conditional and has substantial completion risk. Among the conditions to the Offer is the condition that, together with Common Shares held by the Offeror and its affiliates, at least 66⅔% of the outstanding Common Shares shall have been deposited pursuant to the Offer. As stated above, shareholders holding approximately 45% of the outstanding Common Shares have indicated that they intend to reject the Offer. Accordingly, the Offer is subject to substantial completion risk as it is unlikely that all of the conditions to the Offer will be satisfied.
- The amended Offer does not comply with the Shareholder Rights Plan
- Since the amended Offer is only open for acceptance for 93 days, it is not a “Permitted Bid” under the Shareholder Rights Plan adopted by Ironhorse, and the Offeror has chosen not to amend its bid to become a Permitted Bid. The Shareholder Rights Plan is consistent with the amendments to the Canadian take-over bid rules proposed by the Canadian securities regulators to increase the minimum amount of time that a take-over bid must remain open to 120 days.
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 firstname.lastname@example.org.
How to REJECT the Offer and Withdraw Tendered Shares
To reject the Offer, you should do nothing. The Offer is open for acceptance until February 5, 2016, unless extended further. 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 email@example.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.