06-05-2016, 09:36 PM
Oil Search's $US2.2 billion (A$3 billion)-plus takeover deal for InterOil has received a boost with its Papua New Guinea rival confident it has sufficient investor backing for the deal to proceed.
InterOil management, led by chief executive Michael Hession, have held meetings with key investors in the US in recent days as part of a roadshow to sell the merits of the deal.
Sources said Capital Group, which owns more than 11 per cent of InterOil stock, has given its backing to the buyout ahead of two critical shareholder votes on the transaction.
It is understood Mr Hession is now confident of getting the deal over the line with fund managers supportive of the benefits of the tie-up with Oil Search.
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InterOil's former boss, Phil Mulacek, who owns nearly 6 per cent of the company has blasted the deal for undervaluing the company.
Mr Mulacek has started legal action to postpone shareholder meetings arguing investors were being asked to vote on board nominees before they had full disclosure on the Oil Search deal.
He has also criticised the terms of the Oil Search deal, saying it significantly undervalues the company's large Elk-Antelope gas resource in PNG's Gulf Province and its other discoveries.
A general meeting will be held in New York on June 14 to vote on board directors including five directors put forward by Mr Mulacek who are not endorsed by the board.
InterOil shareholders will then vote on the Oil Search deal in late July, with two-thirds of votes cast needing to be in favour for it to proceed. Even if the board is spilt on June 14, the vote must proceed.
"Mulacek may drag another 5 per cent of shareholders out against the deal but the numbers are still very convincing on the transaction," said a source close to the takeover.
Influential proxy adviser Institutional Shareholder Services sided with the board and against Mr Mulacek arguing the absence of a better offer and InterOil's limited funding capacity meant the risks in voting down the transaction could not be justified.
Other proxy advisers, including Egan Jones and Glass Lewis & Co, have also recommended investors vote for InterOil's director nominees and reject Mr Mulacek's resolutions.
"We believe the recently announced transaction with Oil Search is generally attractive for InterOil shareholders and we are concerned the dissident would seek to interfere with the terms of this transaction in a manner that may place it at risk," Glass Lewis said in its report.
InterOil pointed to the proxy recommendations to urge shareholders to support the current board.
"Glass Lewis – along with ISS and Egan Jones - recognises that since Mr Mulacek's departure from the corporation, the board and management team have transformed InterOil by taking decisive action to monetise the value of the corporation's assets, including through executing favourable transactions," InterOil said in a statement over the weekend.
Read more: http://www.smh.com.au/business/interoil-...z4Ahhtkhuu
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InterOil management, led by chief executive Michael Hession, have held meetings with key investors in the US in recent days as part of a roadshow to sell the merits of the deal.
Sources said Capital Group, which owns more than 11 per cent of InterOil stock, has given its backing to the buyout ahead of two critical shareholder votes on the transaction.
It is understood Mr Hession is now confident of getting the deal over the line with fund managers supportive of the benefits of the tie-up with Oil Search.
Advertisement
InterOil's former boss, Phil Mulacek, who owns nearly 6 per cent of the company has blasted the deal for undervaluing the company.
Mr Mulacek has started legal action to postpone shareholder meetings arguing investors were being asked to vote on board nominees before they had full disclosure on the Oil Search deal.
He has also criticised the terms of the Oil Search deal, saying it significantly undervalues the company's large Elk-Antelope gas resource in PNG's Gulf Province and its other discoveries.
A general meeting will be held in New York on June 14 to vote on board directors including five directors put forward by Mr Mulacek who are not endorsed by the board.
InterOil shareholders will then vote on the Oil Search deal in late July, with two-thirds of votes cast needing to be in favour for it to proceed. Even if the board is spilt on June 14, the vote must proceed.
"Mulacek may drag another 5 per cent of shareholders out against the deal but the numbers are still very convincing on the transaction," said a source close to the takeover.
Influential proxy adviser Institutional Shareholder Services sided with the board and against Mr Mulacek arguing the absence of a better offer and InterOil's limited funding capacity meant the risks in voting down the transaction could not be justified.
Other proxy advisers, including Egan Jones and Glass Lewis & Co, have also recommended investors vote for InterOil's director nominees and reject Mr Mulacek's resolutions.
"We believe the recently announced transaction with Oil Search is generally attractive for InterOil shareholders and we are concerned the dissident would seek to interfere with the terms of this transaction in a manner that may place it at risk," Glass Lewis said in its report.
InterOil pointed to the proxy recommendations to urge shareholders to support the current board.
"Glass Lewis – along with ISS and Egan Jones - recognises that since Mr Mulacek's departure from the corporation, the board and management team have transformed InterOil by taking decisive action to monetise the value of the corporation's assets, including through executing favourable transactions," InterOil said in a statement over the weekend.
Read more: http://www.smh.com.au/business/interoil-...z4Ahhtkhuu
Follow us: @smh on Twitter | sydneymorningherald on Facebook
