Dissent Rights Make Exxon's Bid a coup for patient stockholders

[davidhmtk]

My summary of Dissent Rights under Yukon law:   Shareholders will have 3 choices when they vote on Exxon's offer - yes, no, and no (dissent).  If Yes gets more than 2/3, then all the plain no's will be forced to sell under the offer terms, but the dissenting no's will wait for their money until a Yukon court determines a fair value per share.   Could take a while and in the meantime, the shares have to be taken out of street name ( one implication is that they won't be marginable).   Still, Exxon won't be setting the terms, a court will.

[bossbob]

How do you make your no vote a dissenting no vote?

[Kaliboo]

My summary of Dissent Rights under Yukon law:   Shareholders will have 3 choices when they vote on Exxon's offer - yes, no, and no (dissent).  If Yes gets more than 2/3, then all the plain no's will be forced to sell under the offer terms, but the dissenting no's will wait for their money until a Yukon court determines a fair value per share.   Could take a while and in the meantime, the shares have to be taken out of street name ( one implication is that they won't be marginable).   Still, Exxon won't be setting the terms, a court will.

Questions for 2126 and our other attorneys.

So how does a Yukon court determine a fair value per share?  They hire somone to do it?  What approach do they use? Sum of the parts, market based approach, combinations of approaches?  Is there a right approach or a best approach?

It seems knowing the answer to this is a critical question.  We already know that OSH, TOT and XOM are not offering a sum of the parts approach.  They are using a "screw the shareholders" approach, ignoring the other assets in the company.  Wouldn't a "No with dissent" be the best way to vote to gain the highest value IF the deal goes through?  Or will the laywers charge the dessenters a "fee" for this "service" which will reduce their funds received?

However, before we vote, I think shareholders need to demand our own appraisal be conducted since no one is doing anything on our behalf.  How about hiring GLJ to update their appaisal of E/A.  I presume they could do this quickly since it will be just an update taking into account new data which expands the areal extent of the field.  Do we have any power to force this to happen?

[jft310]

Look at the Dell lawsuit I posted on these pages ,
Courts appointed peeps to do new value appraisals after 2 years of work the deal numbers were proven to be low and those shareholders that voted no collected the higher court proven value ,

[kommonsents]

So they had to wait 2 years for a quantitative decision? Then how long to collect? And how much more did they collect? And what was the then NPV of the EXTRA amount they were able to collect?

Any similar cases in Canada?

[Kaliboo]

So they had to wait 2 years for a quantitative decision? Then how long to collect? And how much more did they collect? And what was the then NPV of the EXTRA amount they were able to collect? Any similar cases in Canada?

It seems the only people who vote no with dissent are large shareholders that are "lawyered up" to know this approach and the answers to the good questions you raise

[trans]

So they had to wait 2 years for a quantitative decision? Then how long to collect? And how much more did they collect? And what was the then NPV of the EXTRA amount they were able to collect? Any similar cases in Canada?

It seems the only people who vote no with dissent are large shareholders that are "lawyered up" to know this approach and the answers to the good questions you raise

FWIW, worked with a fairly big  individual investor during the bear market of 74.  He was a very bright retired lawyer, so he did his own stuff.   I was with him as he filed as a dissenting stockholder on two or three situations, where another company was throwing very low ball takeover bids out.    I've never seen this done since, but he settled with every one of them at a premium.  Why?  What is missing here is that companies DO NOT want to deal with dissenting stockholders.  As I recall, this requires another level of bookkeeping that is more expense for the company, possibly quite a bit so.  Anyway,  the companies started the negotiation with him after he filed.  Believe he filed in the state of inc and was careful to meet their requirements.  Bottom line.....imo first efforts to settle will come from the acquiring company......getting in  touch with you.  fwiw trans

[2126]

Here is a bit of an update on 'dissent' rights in the Yukon. I also want to remind everyone that I am retired and that I have never been licensed to practice law in the Yukon, and, finally, that this information is not intended to be taken as legal advice, but rather merely as my interpretation of the law with regards to dissent rights for IOC shareholders (sorry for the legalese).

SHORT VERSION::

• Dissent rights are different from a 'no' vote. You can still vote 'no' but to "dissent' you must meet certain requirements. If you vote "yes", you have no 'dissent rights'.
• Asserting Dissent rights irrevocably transfers your shares and shareholder rights to the acquring company. (Exxon at the present time).
• What you receive, in return, is a right to "fair market value for your Common Shares" as of "close of business on the last day of business before the day on which the resolution from which the shareholder dissents was adopted".  [Note However that IOC had altered the terms under Yukon Law that such fair market value be determined as of the "Effective Time" (defined as the "date on which the Arrangement has been deemed completed". Note also that the Yukon Court approved this alteration in its Interim Order (seel long version).
• In order to assert 'dissent rights' you must:
  
  • Be a 'registered shareholder of record on or before Record Day set for the vote on the sale
  • Assert your 'dissent rights' prior to the vote (usually at least 2 days prior)
  • Send Notice of Dissent to IOC at a specific address ordered by the Yukon Court (Technically, an Objection to the Arrangement Resolution).
• Very often, as Kaliboo noted, the target corporation (IOC) will settle out of court with dissenters in order to avoid an independent appraisal. Such settlements are, of course, almost always for more than the sale price/share.
• Yukon law specifically sets up a procedure under which the target (IOC) submits written offers to pay a fair value to each dissenting shareholder..
• If one or more shareholders refuses the offer the court may order an independent appraisal (but still based on the date of the Arrangement).
• Generally, dissenting shareholders are not assessed court costs
• Also, under a recent Yukon court case, "fair value" does not reflect any tax consequences of such determination.
• IMPORTANT: You should retain a lawyer, or we can collectively (for, perhaps, a buy-in shared price) retain a Yukon-based lawyer to handle such dissents. I expect Phil to 'dissent' if the current bid is not sweetened. Perhaps he would provide a detailed outine to formally dissent from his Yukon attorneys for other shareholders who wish to dissent.

LONGER VERSION:

Dissent rights in the Yukon are outlined in the Yukon Business Corporations Act, Chapter 13, Section 193. I'll try to outline the pertinent portions here:

Section 193 outlines the requirements that a corporation must follow with regards to dissenting shareholders in order to sell all or substantially all of its assets. The corporation must send a "notice of meeting' regarding the proposed vote for sale/merger/etc. to each shareholder. This notice must include a summary of the terms of the sale and also "state that a dissenting shareholder is entitled to be paid the fair market value of his shares in accordance with Section 194.

IOC fulfilled these requirements with its "400+ page "Notice of Meeting and Material Information Circular for a Special Meeting" regarding the OSH/Total bid, dated June 24, 2016. It addressed Dissent Rights on Pages 59-62 of that MIC.

• Note also that the Yukon Supreme Court [which will handle any IOC sale] will issue an Interim Order regarding the terms of any sale proposal that IOC brings before it. Such an Interim Order was obtained for the OSH/Total bid and is found in the MIC at Schedule F, pages 1-8.
• This Interim Order provided an address for 'dissent notices' of : Suite 300,204 Black Street, Whitehorse, Yukon, Y1A2M9 Canada (Attention: Paul Lackowicz). I'll explain why this is important below also.
• It also provided that anyone exercising their 'dissent rights' by the effective date (2 days before the vote) shall be deemed to have transferred their dissenting shares to OSH, and will lose all rights as shareholders, except the right to be paid 'fair value of such Common Shares in accordance with the Dissent Procedures".
• It provided that only 'registered shareholders as of record date' have 'dissent rights' and
• That a shareholder vote at the meeting shall not be deprived, unless the shareholder votes Yes (which will result in loss of dissent rights).
• That dissent rights are according to Yukon law, AND the terms of the Interim Order, AND Article 4 of the Plan of Arrangement between IOC and OSH, which states that the 'fair market value' be deemed the value at the Effective Time of the Arrangement (when it is completed). THIS is a big deal, because any independent court-ordered appraisal will be of corporation assets well before the drilling of A7 and any subsequent certification appraisals. If my interpretation is correct, this seriously limits any 'fair value' that dissenting shareholders may receive. Any other lawyers please weigh in on this point.

Finally, this is a review of the high points. There is more case law and statutory law that must be consulted to be absolutely certain of one's dissenting rights.

Hope this helps.

[davidhmtk]

Here is a bit of an update on 'dissent' rights in the Yukon. I also want to remind everyone that I am retired and that I have never been licensed to practice law in the Yukon, and, finally, that this information is not intended to be taken as legal advice, but rather merely as my interpretation of the law with regards to dissent rights for IOC shareholders (sorry for the legalese).

SHORT VERSION::

• Dissent rights are different from a 'no' vote. You can still vote 'no' but to "dissent' you must meet certain requirements. If you vote "yes", you have no 'dissent rights'.
• Asserting Dissent rights irrevocably transfers your shares and shareholder rights to the acquring company. (Exxon at the present time).
• What you receive, in return, is a right to "fair market value for your Common Shares" as of "close of business on the last day of business before the day on which the resolution from which the shareholder dissents was adopted".  [Note However that IOC had altered the terms under Yukon Law that such fair market value be determined as of the "Effective Time" (defined as the "date on which the Arrangement has been deemed completed". Note also that the Yukon Court approved this alteration in its Interim Order (seel long version).
• In order to assert 'dissent rights' you must:
  
  • Be a 'registered shareholder of record on or before Record Day set for the vote on the sale
  • Assert your 'dissent rights' prior to the vote (usually at least 2 days prior)
  • Send Notice of Dissent to IOC at a specific address ordered by the Yukon Court (Technically, an Objection to the Arrangement Resolution).
• Very often, as Kaliboo noted, the target corporation (IOC) will settle out of court with dissenters in order to avoid an independent appraisal. Such settlements are, of course, almost always for more than the sale price/share.
• Yukon law specifically sets up a procedure under which the target (IOC) submits written offers to pay a fair value to each dissenting shareholder..
• If one or more shareholders refuses the offer the court may order an independent appraisal (but still based on the date of the Arrangement).
• Generally, dissenting shareholders are not assessed court costs
• Also, under a recent Yukon court case, "fair value" does not reflect any tax consequences of such determination.
• IMPORTANT: You should retain a lawyer, or we can collectively (for, perhaps, a buy-in shared price) retain a Yukon-based lawyer to handle such dissents. I expect Phil to 'dissent' if the current bid is not sweetened. Perhaps he would provide a detailed outine to formally dissent from his Yukon attorneys for other shareholders who wish to dissent.

LONGER VERSION:

Dissent rights in the Yukon are outlined in the Yukon Business Corporations Act, Chapter 13, Section 193. I'll try to outline the pertinent portions here:

Section 193 outlines the requirements that a corporation must follow with regards to dissenting shareholders in order to sell all or substantially all of its assets. The corporation must send a "notice of meeting' regarding the proposed vote for sale/merger/etc. to each shareholder. This notice must include a summary of the terms of the sale and also "state that a dissenting shareholder is entitled to be paid the fair market value of his shares in accordance with Section 194.

IOC fulfilled these requirements with its "400+ page "Notice of Meeting and Material Information Circular for a Special Meeting" regarding the OSH/Total bid, dated June 24, 2016. It addressed Dissent Rights on Pages 59-62 of that MIC.

• Note also that the Yukon Supreme Court [which will handle any IOC sale] will issue an Interim Order regarding the terms of any sale proposal that IOC brings before it. Such an Interim Order was obtained for the OSH/Total bid and is found in the MIC at Schedule F, pages 1-8.
• This Interim Order provided an address for 'dissent notices' of : Suite 300,204 Black Street, Whitehorse, Yukon, Y1A2M9 Canada (Attention: Paul Lackowicz). I'll explain why this is important below also.
• It also provided that anyone exercising their 'dissent rights' by the effective date (2 days before the vote) shall be deemed to have transferred their dissenting shares to OSH, and will lose all rights as shareholders, except the right to be paid 'fair value of such Common Shares in accordance with the Dissent Procedures".
• It provided that only 'registered shareholders as of record date' have 'dissent rights' and
• That a shareholder vote at the meeting shall not be deprived, unless the shareholder votes Yes (which will result in loss of dissent rights).
• That dissent rights are according to Yukon law, AND the terms of the Interim Order, AND Article 4 of the Plan of Arrangement between IOC and OSH, which states that the 'fair market value' be deemed the value at the Effective Time of the Arrangement (when it is completed). THIS is a big deal, because any independent court-ordered appraisal will be of corporation assets well before the drilling of A7 and any subsequent certification appraisals. If my interpretation is correct, this seriously limits any 'fair value' that dissenting shareholders may receive. Any other lawyers please weigh in on this point.

Finally, this is a review of the high points. There is more case law and statutory law that must be consulted to be absolutely certain of one's dissenting rights. Hope this helps.

I would think the Total SPA is one of the 2 largest assets of IOC ( the other is the balance of the E/A gas that IOC didnlt sell ).   So A7  as well as A8,A9...are included by the value of the wildcard certification, as well as the 30% share of the plant's profits.

[Kaliboo]

Here is a bit of an update on 'dissent' rights in the Yukon. I also want to remind everyone that I am retired and that I have never been licensed to practice law in the Yukon, and, finally, that this information is not intended to be taken as legal advice, but rather merely as my interpretation of the law with regards to dissent rights for IOC shareholders (sorry for the legalese).

SHORT VERSION::

• Dissent rights are different from a 'no' vote. You can still vote 'no' but to "dissent' you must meet certain requirements. If you vote "yes", you have no 'dissent rights'.
• Asserting Dissent rights irrevocably transfers your shares and shareholder rights to the acquring company. (Exxon at the present time).
• What you receive, in return, is a right to "fair market value for your Common Shares" as of "close of business on the last day of business before the day on which the resolution from which the shareholder dissents was adopted".  [Note However that IOC had altered the terms under Yukon Law that such fair market value be determined as of the "Effective Time" (defined as the "date on which the Arrangement has been deemed completed". Note also that the Yukon Court approved this alteration in its Interim Order (seel long version).
• In order to assert 'dissent rights' you must:
  
  • Be a 'registered shareholder of record on or before Record Day set for the vote on the sale
  • Assert your 'dissent rights' prior to the vote (usually at least 2 days prior)
  • Send Notice of Dissent to IOC at a specific address ordered by the Yukon Court (Technically, an Objection to the Arrangement Resolution).
• Very often, as Kaliboo noted, the target corporation (IOC) will settle out of court with dissenters in order to avoid an independent appraisal. Such settlements are, of course, almost always for more than the sale price/share.
• Yukon law specifically sets up a procedure under which the target (IOC) submits written offers to pay a fair value to each dissenting shareholder..
• If one or more shareholders refuses the offer the court may order an independent appraisal (but still based on the date of the Arrangement).
• Generally, dissenting shareholders are not assessed court costs
• Also, under a recent Yukon court case, "fair value" does not reflect any tax consequences of such determination.
• IMPORTANT: You should retain a lawyer, or we can collectively (for, perhaps, a buy-in shared price) retain a Yukon-based lawyer to handle such dissents. I expect Phil to 'dissent' if the current bid is not sweetened. Perhaps he would provide a detailed outine to formally dissent from his Yukon attorneys for other shareholders who wish to dissent.

LONGER VERSION:

Dissent rights in the Yukon are outlined in the Yukon Business Corporations Act, Chapter 13, Section 193. I'll try to outline the pertinent portions here:

Section 193 outlines the requirements that a corporation must follow with regards to dissenting shareholders in order to sell all or substantially all of its assets. The corporation must send a "notice of meeting' regarding the proposed vote for sale/merger/etc. to each shareholder. This notice must include a summary of the terms of the sale and also "state that a dissenting shareholder is entitled to be paid the fair market value of his shares in accordance with Section 194.

IOC fulfilled these requirements with its "400+ page "Notice of Meeting and Material Information Circular for a Special Meeting" regarding the OSH/Total bid, dated June 24, 2016. It addressed Dissent Rights on Pages 59-62 of that MIC.

• Note also that the Yukon Supreme Court [which will handle any IOC sale] will issue an Interim Order regarding the terms of any sale proposal that IOC brings before it. Such an Interim Order was obtained for the OSH/Total bid and is found in the MIC at Schedule F, pages 1-8.
• This Interim Order provided an address for 'dissent notices' of : Suite 300,204 Black Street, Whitehorse, Yukon, Y1A2M9 Canada (Attention: Paul Lackowicz). I'll explain why this is important below also.
• It also provided that anyone exercising their 'dissent rights' by the effective date (2 days before the vote) shall be deemed to have transferred their dissenting shares to OSH, and will lose all rights as shareholders, except the right to be paid 'fair value of such Common Shares in accordance with the Dissent Procedures".
• It provided that only 'registered shareholders as of record date' have 'dissent rights' and
• That a shareholder vote at the meeting shall not be deprived, unless the shareholder votes Yes (which will result in loss of dissent rights).
• That dissent rights are according to Yukon law, AND the terms of the Interim Order, AND Article 4 of the Plan of Arrangement between IOC and OSH, which states that the 'fair market value' be deemed the value at the Effective Time of the Arrangement (when it is completed). THIS is a big deal, because any independent court-ordered appraisal will be of corporation assets well before the drilling of A7 and any subsequent certification appraisals. If my interpretation is correct, this seriously limits any 'fair value' that dissenting shareholders may receive. Any other lawyers please weigh in on this point.

Finally, this is a review of the high points. There is more case law and statutory law that must be consulted to be absolutely certain of one's dissenting rights. Hope this helps.

Thanks 2126 for you efforts and sharing.  Sounds like dissenters always come out ahead.  I definitely would not pursue this without legal counsel.  And that requirement adds cost which raises the question as to why go down this path if you are not very likely to improve by a signficant percent.  I like the idea of Phil giving us instructions to follow.  But there seems to be a lot of unknowns.  It would be a very interesting learning experience, but no idea what the price tag might be.