Since the OSH purchase of IOC was announced on 5/20/16, I have been promoting the idea of filing a class action lawsuit to delay the shareholder vote until a 3rd party valuation of all of IOC's assets could be completed. The response to this idea from SHU members has generally been a preference for a 'Vote No' campaign.
I would like to add some additional comments relating to these 2 approaches.
1) Class Action Lawsuit for Delaying Shareholder Vote:
a) A successful lawsuit would delay the vote for 9 months to a year since it could not be satisfactorily completed until after the testing of Antelope 7.
b) The valuation by a 3rd party would include all of the assets of IOC that do no appear to be part of the current OSH valuation:
1) Triceratops, Raptor and Bobcat discoveries
2) Antelope South and Wahoo
3) 3+ million of unexplored acerage including any results for seismic & other geological testing for this acreage
4) IOC's financial interest in Papua LNG plant
5) Completed resource certification of Elk/Antelope (including Antelope 7)
6) Other asset values that have been discovered since Phil Mulacek left IOC that have not previously been disclosed by IOC's current management.
c) If the above items are included in a valuation of IOC's assets, it is a certainty that the valuation of IOC will be materially increased & could easily be valued at several mutlitples of the current OSH transaction.
d) The ambiquity that currently exists relating to the value of IOC's assets is greatly reduced if we can obtain an arms length valuation by a 3rd party expert.
e) The last thing that OSH & Total want at this time is to delay the shareholder vote. Bottens has made it very clear that it is very important to OSH to close the deal on its current schedule.
f) A proper valuation by an independent 3rd party expert that is appointed by the court will create a great deal of pressure on the institutional fund managers to vote against the OSH transaction. They have their own fiduciary responsibilities to worry about if they ignore a valuation ordered by the court which is significantly higher than OSH's offer price.
g) We should not discount the power a plaintiff has in a lawsuit which is available to us primarily because of the subpoena power of the court.
h) At a later date, the class action lawsuit can be expanded to include a claim against Hession and IOC's BOD for 'breach of their fiduciary duty to IOC's shareholders'.
i) A class action lawsuit will not happen unless someone or some group has the time and desire to work in concert with the law firm selected to represent the Class Action plaintiffs.
2) 'Vote No' Campaign:
a) I am not against working for a successfull 'Vote No' campaign, but (for the following reasons) I think it's success will be short lived and will ultimately yield an unsatisfacotory result to IOC's shareholders.
* If the 'Vote No' campaign is successfull, we are still left with Hession and the current BOD to deal with.
* Hession and the BOD will simply present another offer from several fall-back positions they have already laid out internally.
* If they are not able to obtain IOC's assets by paying $.25 to $.30 on the dollar, can they get them for $.45 to $.50 on the dollar, or will they have to eventually pay 65% or higher to steal them.
* I think it would be foolish to believe that they don't have several fall-back positions waiting in the wings.
* If the 'No' votes carry the day on July 28th and OSH subsequently offers a sweetened deal, I believe the tendency of most IOC shareholders will be to accept the subsequent offer, regardless of how dissatisfactory it may also be.
b) What happens if the 'Vote No' campaign is not successful. Then, to me, it seems we will have very limited options other than filing a lawsuit for recovery. A lawsuit at this stage would seem to be more a 'sour grapes' suit vs. a pro-active suit that could have been filed prior to the shareholder vote.
Like most of the SHU members, I have been an IOC shareholder since Feb 2009. Although I haven't been an active member of SHU from a participation standpoint, I have followed it closely for the last 7+ years. I hope you will take the time to consider the above. My background for the last 10+ years has been working in the valuation business, primarily contracting with large law firms in the DFW area.
