IOC's BOD still recommends the OSH Proposal - WTF?

[Stavros]

You can't make this up!

IOC says that the XOM Proposal is Superior .... BUTT the IOC BOD continues to recommend the Oil Search transactions to its shareholders despite the FACT that the XOM Proposal is SUPERIOR

InterOil Board of Directors Determines Unsolicited ExxonMobil Proposal Constitutes a Superior Proposal to Oil Search Transaction

Singapore and Port Moresby, July 18, 2016:

InterOil Corporation ( the "Company" ) ( NYSE: IOC; POMSoX: IOC ) announced today that the unsolicited proposal to acquire InterOil, the receipt of which was publicly announced by InterOil on June 30, 2016, was made by Exxon Mobil Corporation ( NYSE: XOM ) ( “ExxonMobil” ) ( the “ExxonMobil Offer” ). The Company’s Board of Directors, in consultation with its legal and financial advisors, has determined that the ExxonMobil Offer constitutes a “Superior Proposal,” as defined in InterOil’s arrangement agreement ( “Oil Search Agreement” ) with Oil Search Limited ( ASX:OSH, POMSoX: OSH ) ( "Oil Search" )  and InterOil has provided notice of such determination to Oil Search.

Under the terms of the ExxonMobil Offer, InterOil shareholders would receive: 

• A payment of $45.00 per share of InterOil, paid in ExxonMobil shares. The number of ExxonMobil shares paid per share of InterOil would be calculated based on the volume weighted average price of ExxonMobil shares over a measuring period of ten days ending shortly before the closing date. 
• A Contingent Resource Payment ( “CRP” ) , which would be an additional cash payment of approximately $7.07 per share for each tcfe gross resource certification of the ElkAntelope field above 6.2 tcfe, up to a maximum of 10 tcfe. The CRP would be paid on the completion of the interim certification process in accordance with the Share Purchase Agreement with Total SA, which would include the Antelope-7 appraisal well. The CRP would not be transferrable and would not be listed on any stock exchange.

Under the terms of the Oil Search Agreement, Oil Search has a period of three calendar days, which will expire on July 21, 2016 ( the “Response Period” ), during which it can offer to amend the terms of the Oil Search Agreement. Oil Search is under no obligation to make such an offer and InterOil does not know if Oil Search will seek to amend the Oil Search Agreement. The InterOil Board of Directors continues to recommend the Oil Search transaction to its shareholders.

InterOil notes that there can be no assurance that the ExxonMobil Offer will lead to the termination of the Oil Search Agreement and the execution of an arrangement agreement with ExxonMobil, or that the transaction contemplated by the ExxonMobil Offer will be approved by shareholders or consummated.

[AU74]

So, I guess the voting is still ongoing and binding. Incredible.

[Kaliboo]

You can't make this up!

IOC says that the XOM Proposal is Superior .... BUTT the IOC BOD continues to recommend the Oil Search transactions to its shareholders despite the FACT that the XOM Proposal is SUPERIOR

InterOil Board of Directors Determines Unsolicited ExxonMobil Proposal Constitutes a Superior Proposal to Oil Search Transaction

Singapore and Port Moresby, July 18, 2016:

InterOil Corporation ( the "Company" ) ( NYSE: IOC; POMSoX: IOC ) announced today that the unsolicited proposal to acquire InterOil, the receipt of which was publicly announced by InterOil on June 30, 2016, was made by Exxon Mobil Corporation ( NYSE: XOM ) ( “ExxonMobil” ) ( the “ExxonMobil Offer” ). The Company’s Board of Directors, in consultation with its legal and financial advisors, has determined that the ExxonMobil Offer constitutes a “Superior Proposal,” as defined in InterOil’s arrangement agreement ( “Oil Search Agreement” ) with Oil Search Limited ( ASX:OSH, POMSoX: OSH ) ( "Oil Search" )  and InterOil has provided notice of such determination to Oil Search.

Under the terms of the ExxonMobil Offer, InterOil shareholders would receive: 

• A payment of $45.00 per share of InterOil, paid in ExxonMobil shares. The number of ExxonMobil shares paid per share of InterOil would be calculated based on the volume weighted average price of ExxonMobil shares over a measuring period of ten days ending shortly before the closing date. 
• A Contingent Resource Payment ( “CRP” ) , which would be an additional cash payment of approximately $7.07 per share for each tcfe gross resource certification of the ElkAntelope field above 6.2 tcfe, up to a maximum of 10 tcfe. The CRP would be paid on the completion of the interim certification process in accordance with the Share Purchase Agreement with Total SA, which would include the Antelope-7 appraisal well. The CRP would not be transferrable and would not be listed on any stock exchange.

Under the terms of the Oil Search Agreement, Oil Search has a period of three calendar days, which will expire on July 21, 2016 ( the “Response Period” ), during which it can offer to amend the terms of the Oil Search Agreement. Oil Search is under no obligation to make such an offer and InterOil does not know if Oil Search will seek to amend the Oil Search Agreement. The InterOil Board of Directors continues to recommend the Oil Search transaction to its shareholders.

InterOil notes that there can be no assurance that the ExxonMobil Offer will lead to the termination of the Oil Search Agreement and the execution of an arrangement agreement with ExxonMobil, or that the transaction contemplated by the ExxonMobil Offer will be approved by shareholders or consummated.

Is this an IOC tactic to avoid the breakup fee?  E.g. If OSH modifies it offer in the 3 day window, then is there no break up fee as long as the revised OSH deal is approved.  After the 3 day window, then IOC will have to recommend the offer and will have to pay a break up fee if OSH has not offer.

[Stavros]

Upon further review of the Arrangement Agreement wording, the IOC BOD is still contractually required to say they recommend the OSH Proposal for the next three days.

OSH has until Close of Business on Thursday to improve their Bid.

If OSH improves the Bid by Thursday COB, then the IOC BOD will continue to recommend OSH
If OSH does not improve the Bid by Thursday COB, then the IOC BOD will convene and recommend the XOM Bid

[Crippsfl]

I don't see how the current shareholders vote can be used for any new transaction by OSH in response to the Exxon bid. It is not what was voted on. It would seem to me that a new vote would be required by the shareholders on any new bid.

[jft310]

Shareholders must vote on the final bid . The BOD can only recommend ,

[ArtM72]

I don't see how the current shareholders vote can be used for any new transaction by OSH in response to the Exxon bid. It is not what was voted on. It would seem to me that a new vote would be required by the shareholders on any new bid.

I have that same problem with the trajectory of the coverage on this deal.  All this nonsense about having to respond in three days or by July 28 is just that.  A Yes vote sells to OSH unless the vote is cancelled.  A NO vote with a new binding agreement from XOM for the sale of the company will result in a new vote, with all the possible accompanying intrigue.

Sell XOM PRL15 for the consideration mentioned and leave the company with all the rest of its "worthless" discoveries and prospects. That way no shareholder vote is necessary.  Win-win-win.

[jft310]

Art -Hession does not get paid that way . I love your idea though .

[Relker]

It is good thing if the original Osh bid is from the table. However, the XOM bid is not much better. By selling now we keep the risk for the ultimate resource size. So let us wait till FID. At that time we are able to cash the 35% project discount on the NPV which are included by all analysts and most probably prospective buyers.

[davidhmtk]

We all saw how the IPI investors were screwed by the "independent appraisers", ( that is, they are as independent as the ratings agencies).  So, I would like to have Exxon aligned with our interest in a fair appraisal of E/A.