04-15-2016, 04:59 AM
Pavel from RJ on Suit:
InterOil Corp. (IOC/$32.27/Outperform): former CEO's lawsuit is a non-event that merely adds noise. Last month, Phil Mulacek,
the former CEO, made a formal proposal to reduce the size of the board and also cut the amounts paid to board members. In our
view, neither idea makes much difference in the grand scheme of things, and the proposal was interesting purely because it
seemingly came out of nowhere, with Mulacek (a 7% shareholder) having been disengaged since being ousted three years ago. This
week, the plot thickened. After meeting a few days ago with management, Mulacek decided to file a lawsuit against the company,
demanding a special shareholders meeting in advance of the normal annual meeting on June 14. Mulacek's agenda at this point is a
mystery to us. If the lawsuit is a kind of belated revenge tactic against his former employer, it certainly faces low odds of success.
And if he wants his old job back, then litigation is an even more counterproductive way of going about it. This drama seems rather
pointless, but in any case we believe it represents a non-event insofar as business fundamentals (resource certification, etc.) are
concerned.