New IOC Shareholders Rights Plan & Bylaws - TakeOver Verbage

[Tree]

Previously announced Annual Special Meeting for May 14th is now combined with AGM on June 24.

Aceptable bids and takeover bids, May 29th ....   Sumptin is up.

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PORT MORESBY, Papua New Guinea and HOUSTON, April 24, 2013 /PRNewswire/ -- InterOil Corporation (IOC) (IOC) announces the adoption of a new shareholder rights plan (the "New Rights Plan" which will become effective on May 29, 2013, concurrent with the termination of the current shareholders rights plan of InterOil, and the Company has also adopted new by laws, which became effective on April 24, 2013.

Shareholder Rights Plan
InterOil adopted both the original rights plan and the New Rights Plan to ensure, to the extent possible: (i) that all shareholders are treated fairly in connection with any takeover offer for the Company, and (ii) in the event of an unsolicited bid, to ensure that the board of directors (the "Board" is provided with a sufficient period of time to evaluate unsolicited takeover bids and to explore and develop alternatives to maximize Shareholder value.

Under the terms of the New Rights Plan, one right will be issued by the Company for each outstanding common share at the close of business on May 29, 2013, and for each common share issued in the future (subject to the terms of the New Rights Plan).  The rights issued under the New Rights Plan become exercisable only if an offeror acquires or announces its intention to acquire 20% or more of the common shares of the Corporation without complying with the "Permitted Bid" provisions of the New Rights Plan or without the approval of the Board.

Permitted Bids must be made to all holders of common shares of InterOil by way of a takeover bid circular prepared in compliance with applicable securities laws and, among other things, must be open for acceptance for a minimum of 60 days.  If at the end of 60 days at least 50% of the outstanding common shares other than those owned by the offeror and certain related parties have been tendered and not withdrawn, the bidder may take up and pay for the shares but must extend the bid for a further 10 days to allow other shareholders to tender to the bid.

If a takeover bid does not meet the Permitted Bid requirements of the New Rights Plan, the rights will entitle InterOil shareholders, excluding the shareholder or shareholders making the takeover bid, to purchase additional common shares of the Company at a substantial discount to the market price of the common shares at that time.

The New Rights Plan is similar to the type of rights plans adopted by other Canadian incorporated public companies and is substantially similar to the current shareholder rights plan.  The New Rights Plan is not being adopted in response to any actual or threatened takeover bid or other proposal from a third party to acquire control of the Company.

InterOil expects to seek shareholder approval and ratification of the New Rights Plan at its upcoming annual and special meeting of shareholders to be held on June 24, 2013.  If the New Rights Plan is not ratified at the meeting, the New Rights Plan and all rights issued thereunder will terminate.

A copy of the New Rights Plan is available under InterOil's profile on SEDAR at www.sedar.com, or you can request copies from InterOil's Secretary at 111 Somerset Road, TripleOne Somerset, #06-05, Singapore 238164.  You can also obtain a copy of the New Rights Plan on InterOil's website (www.interoil.com).

New Bylaws   Advance Notice Requirement for Nominating Directors
The Board adopted new bylaws effective April 24, 2013, which replaced its previous by laws initially adopted in 2007.  The new bylaws implement advance notice provisions in respect of the election of directors at shareholder meetings and also to include comprehensive procedures consistent with the Business Corporations Act (Yukon) and with by laws of other public companies incorporated in Canada.

The advance notice provisions in the new bylaws fix a deadline by which shareholders must submit a notice of director nominations to the Company prior to any annual or special meeting of shareholders where directors are to be elected and sets forth the information that a shareholder must include in the notice for it to be valid.  In the case of an annual meeting of shareholders, notice to InterOil must be given not less than 30 nor more than 65 days prior to the date of the annual meeting; provided, however, that if the annual meeting is to be held on a date that is less than 50 days after the date on which the first public announcement of the date of the annual meeting was made, notice must be given not later than the close of business on the 10th day following such public announcement.  In the case of a special meeting of shareholders (that is not also an annual meeting), notice to InterOil must be given not later than the close of business on the 15th day following the day on which the first public announcement of the date of the special meeting was made.

The new bylaws also amend the old by laws to:

1. increase the quorum requirement for shareholder meetings from 5% to 25% of the votes eligible to vote at the meeting, consistent with proxy advisory firm recommendations;
2. introduce comprehensive provisions governing the borrowing of money and the giving of guarantees and security by InterOil;
3. permit InterOil to hold shareholders' meetings by electronic means, and shareholders to participate in, and vote at, meetings by electronic means;
4. include flexibility to accommodate the use of electronic book based or other non certificated systems; and
5. include a number of amendments to ensure that the new bylaws conform to the provisions of the Business Corporations Act (Yukon) and allow InterOil to respond to evolving corporate practices, including, among others, comprehensive provisions regarding director conflicts of interest, indemnification of directors and officers, procedures governing shareholder and director meetings, the appointment and removal of officers, and the payment of dividends.

The Company expects to seek shareholder approval and confirmation of the new bylaws at its upcoming annual and special meeting of shareholders to be held on June 24th, 2013.  If shareholders do not confirm the new bylaws at the meeting, the new by laws will no longer be valid and the old by laws will once again be the by laws that regulate InterOil's business and affairs.

Copies of the new bylaws and the old by laws are available under InterOil's profile on SEDAR atwww.sedar.com, or you can request copies from InterOil's Secretary at 111 Somerset Road, TripleOne Somerset, #06-05, Singapore 238164 .  You can also obtain a copy of the new by laws on InterOil's website (www.interoil.com).

[johnwgrant]

Does this imply that a hostile bid (if any bidder wants to go that route) needs to happen before May 29th - when the new rights plan is effective ?

In other words, the current "poison pill" is being replaced with the new plan on May 29th. So, if the current "anti-takeover" plan is weak (and I do not know that it is), then a bidder going hostile would need to move quickly !?!?

[johnwgrant]

While I am commenting.... We have a huge short interest (over $1 Billion dollars short)... My favorite theory (don't know how anyone could prove this though) is that a Major Oil company is behind the scenes orchestrating this. It certainly would be easier for a Major Oil company to bid $150/share to take out InterOil (when the stock price is about $75), than bid $175 when the stock price is $150 !!!

Just a conspiracy theory for those so inclined !

[Gator]

Slow down there, cowboy.

The New Rights Plan is similar to the type of rights plans adopted by other Canadian incorporated public companies and is substantially similar to the current shareholder rights plan. The New Rights Plan is not being adopted in response to any actual or threatened takeover bid or other proposal from a third party to acquire control of the Company.

[Tree]

'not being adopted in RESPONSE to any actual or threatened takeover attempt YET'...

Bet a buck management expects to get one soon.

[Palm]

This is VERY interesting because of what myself and a couple of others have been kicking around as possibilities with the recent announcements. This fits some of the theories very well. The thoughts:
1. We all know Phil is the typical hard-working, don't work for nobody, my way, and very proud entrepreneur. IOC would never had gotten to where it is without him or someone like him. Some have labeled him a cowboy, hard-headed, hard to deal with, unreasonable, etc. But he's a Type A entrepreneur; pure and simple. He pisses people off, but he gets things done. Think of Bobby Knight. But he also has a social conscience in regard to the people in PNG; a high desire to be a good corporate citizen (read this if you haven't already: http://www.interoil.com/iocfiles/documen...202012.pdf )

2. Early on things were structured Phil's way based on his wishes for the company. His goal has always been to have a fully-integrated oil and gas company and the next Arco story; small to major. Hard to do these days, but try and stop him. He has driven hard to accomplish that dream and in doing so he has built a heck of a company, and attracted a lot of top-notch people. His BOD has tended to be hand-picked people who support him; that's normal. He has had little or no desire to get bought by or team up with a major/super-major who would take away control or even buy out the company (hence the original poison-pill).

3. IOC happened upon the "cowboy's" dream; a huge find in a remote country at the right time. Exactly what he's hoped for; the key to his dream for IOC. But he has wanted to keep control and find other companies (PRE, EWC, Flex, etc) to work with which would allow the dream to happen. He's had support from his executive team and BOD, for the most part and shareholders in general. IMHO a recent shareholder by the name of Richard Chandler has been a big supporter and is also a larger holder of EWC. He likes the idea of social responsibility, ecological friendliness and challenges the ways of the bigs. We've heard however that PNG likes EWC and their ideas, but THIS project may be too big and important for PNG and PNG's aid partners (particularly Japan, SK and China). "Maybe we'll let you go with EWC, but we may then do a separate project while we watch and see whether EWC can pull it off."

4. IMHO things came to head in the recent BOD meetings where Phil's "retirement" ended up happening. Phil still wants to keep control, call the shots on the upstream (his love is exploration and drilling) and go with companies like EWC which will give him his best shot at becoming the next Arco. The BOD has been forced to look at what's "best" for the shareholders; Phil's plan MAY work LT, but shareholders are demanding something good/great NOW. Things came to a head and Phil is "retiring". The way it's being done is best for the company and shareholders, but IMHO Phil no likie. He is CEO until EOD next Tuesday at which time he becomes an "advisor" and remains on the BOD, but still a very large shareholder with very large desires yet.

5. So what's the WAG? Shell/XOM/Total/JKM wants in, but demands control. "Fair price"? Sure, but we control upstream and midstream so we can confirm, drill and produce, as fast as possible before the window closes. Phil would lose his dream and control of the upstream. IOC is either
a) A willing partner in things with little say
b) Becomes 30/40/50% owned by someone (Woodside model) where EA gets good value paid for, Tri some, but discounted, the rest gets realized together with shareholders as things get proven up and developed over the years (Could IOC pps then get to Phil's "dream price? Maybe not all the way, but certainly "up there")
c) Totally bought out for ?

6. What becomes of Phil? He has a lot os shares, as does RC and some other individuals. RC has 15% and with a few others (including Phil) the 20% is reachable very quickly. The 20% is also a level at which a holder must declare its intentions (holding? desire to take over? etc). IMHO Phil does not have retiring and playing golf in mind. He wants to do more. Who would be a likely company he would want to do more with? IMHO, EWC. They are waiting in the wings to see what if anything they might get at Gulf, or in Western Province (where they have proposals). Depending on how things go, Phil may want to join EWC as executive and/or Board member and work with them with Chandler's support and backing. They are on the move in Indon and The Philippines, and still have big chances in PNG (the PNG government especially O'Neill likes EWC and its CEO). Their concept has recently been endorsed by Shell. They just have to get some modules in production and they could make it big. Could be a good fit for Phil.

7. So could this new plan not only be addressing getting things in line with the rest of the public companies, but also getting ready for a possible sale by Phil/RC/? of their shares directly to a Shell/XOM/Total as well as a friendly and unfriendly takeover? Would Phil and Chandler really want to still own shares of IOC when they no longer are in love with it because of selling partially or totally to a super-major? Possibly not. Take the money and make a bet with EWC.

Many ways this can play out yet, but th "ending" is likely closer than we think. What are Phil and Chandler thinking right now? What is the BOD expecting/planning for?

As we've said many times; this would make a great book or movie some day.

[admin]

What Phil does after IOC, whether with Chandler, EWC, or playing golf, is interesting, but mostly on a personal level, we're not shareholders in Phil but in IOC. I think what happened can be reduced to two choices:
- Either Phil resigned because something unpalatable happened, or
- He was forced to resign because he was blocking developments

There's not actually a whole lot of difference between them as the likely candidate in both is that IOC is going to lose more control than Phil was wanting to accept.

We have RJ saying as much and it isn't a surprise either, supermajors have a habit of wanting control and not playing second fiddle to minors.

It's also a fairly common problem in business that those who started it are often not the most adquate to lead it into maturity, not everybody is Steve Jobs, although I have no way of knowing whether this is the case with Phil.

This means that a deal with supermajor is imminent (surprise surprise..). Whether we can have our cake and eat it too (that is, an imminent share price pop from the deal AND enjoying most of the fruits of the long-term appreciation that comes from monetization of E/A and accelerated exploration) remains very much to be seen.

I think the first is near certain, but I think we (as shareholders) are considerably compromised as to the second, by ceding a lot of control to our new deal-partner, apparently too much to the liking of Phil.

With control comes the claim to residual earnings, needless to say.

I've long ago argued for what I called the 'gambit' option for E/A, that is, if they had to, accept a sub-par deal on E/A in order to enable the company to do it all again with new discoveries, the odds of which I fancied even before that PRE statement that they're all between 5-10T. I have a feeling that option is now well and truly off the table, which is a pity, and this is likely why Phil left or was forced to leave. PNG politics might have been a limiting factor in this as well.

Well, one cannot have everything in life, I guess.

[Palm]

"What Phil does after IOC, whether with Chandler, EWC, or playing golf, is interesting, but mostly on a personal level, we're not shareholders in Phil but in IOC"

So if Phil/RC/? were to decide to go to, say PTT or someone they feel better about than, say a Shell, and offer up their shares under certain conditions, that's just a personal matter as far as interest and we shouldn't give it a thought, nor should the BOD? Interesting

[admin]

"What Phil does after IOC, whether with Chandler, EWC, or playing golf, is interesting, but mostly on a personal level, we're not shareholders in Phil but in IOC" So if Phil/RC/? were to decide to go to, say PTT or someone they feel better about than, say a Shell, and offer up their shares under certain conditions, that's just a personal matter as far as interest and we shouldn't give it a thought, nor should the BOD? Interesting

Obviously that would be interesting (although PTT is perhaps a bit of an awkward example), but you had him riding into the sunset with EWC.

Do we even know he's aligned with Chandler would be another interesting question.

Another thing is that perhaps the choice between the immediate pay-off from a deal versus remaining in control isn't such a sharp choice, but more of a continuum

[kommonsents]

"What Phil does after IOC, whether with Chandler, EWC, or playing golf, is interesting, but mostly on a personal level, we're not shareholders in Phil but in IOC" So if Phil/RC/? were to decide to go to, say PTT or someone they feel better about than, say a Shell, and offer up their shares under certain conditions, that's just a personal matter as far as interest and we shouldn't give it a thought, nor should the BOD? Interesting

Obviously that would be interesting (although PTT is perhaps a bit of an awkward example), but you had him riding into the sunset with EWC.

Do we even know he's aligned with Chandler would be another interesting question.

Another thing is that perhaps the choice between the immediate pay-off from a deal versus remaining in control isn't such a sharp choice, but more of a continuum

Another thorn to be concerned about?