05-23-2016, 02:48 PM
I have read most of the comments on SHU about the IOC sale and it appears that the large majority of SHU members support the option to vote no. I have also read the Bernstein Report that states that obtaining a 2/3's vote in favor of the sale shouldn't be much of a hurdle.Rather than putting all of our eggs in the basket of a successful "Vote No" campaign, it seems to me that the first step is to obtain an injunction against the sale transaction by filing a class action suit against Michael Hession and IOC's BODs. The basis for the suit is that MH and the BOD have abdicated their responsibility to protect the financial interests of IOC's shareholders.Time is not on our side! OSH & Total will be pushing to close the transaction as soon as possible and apparently Hession stands to benefit handsomely if the deal is closed before 7/16/16. The IOC shareholders were blindsided by this transaction and we need to be able to defend ourselves against this thievery by OSH and Total.We need to file this class action suit to buy more time and hopefully be able to present our case to the same legal tribunal that heard OSH's claim of 'right of first refusal' against IOC.In the last few days, many SHU members have expressed legitimate reasons for the unfairness of this proposed sale for IOC shareholders. Here are a few additional thoughts I have which I think are also valid.a) The 200 day moving average for IOC's PPS prior to the announcement of the sale was about $31.00. The reason it has remained so low for so long, even though oil prices have substantially improved, is that OSH and Total have been trading IOC's stock between themselves to keep the stock price at an artificially low level. The reason, of course, was so they could tout that the premium paid for IOC was reasonable.b) When Michael Hession stated that IOC would be worth $9 Billion in a few years, he did not pull that number out of thin air. We need to know the specifics about that statement. For example,1) What are the value components that make up the $9 Billion?2) What discount rate was used for each component?3) After the discount rate is applied, how conservative were the values assigned to each component?4) What is the range of IOC's projected net worth based on a mildly conservative approach vs. a more aggressive approach?Without any help from MH to support his $9 B valuation, we can certainly come up with our own valuation based on IOC assets.A $9 Billion market cap with 49.68 million shares outstanding produces a PPS of over $180. The way I interpret the details of the sale, we will be very lucky to achieve a per share value of over $70. Of course, if IOC shareholders lose the difference between the $180 value and $70 value, it has not dissolved in thin air. It has been transferred to OSH and Total. A more realistic value range to be received by IOC shareholders is between $60 & $65 per share. In other words, compared to a new worth of $9B, we will have had about 65% or IOC's value stolen from us if this sale occurs as currently proposed. How much more will have been stolen if a reasonable valuation for IOC is $12 B or $15 B.One SHU member stated that the value of the E/A liquids alone over a 10 year period were estimated at $3.6 B. Of course, the liquids are a by-product. What are the projected LNG revenues over the life expectancy of E/A & other discoveries by IOC and future discoveries by IOC.c) How much have IOC's shareholders lost because the proposed sale doesn't appear to attribute any value to:1) Triceratops, Bobcat and Raptor.2) 35 to 40 other prospects.3) Antelope 7At this point, our options are limited because the IOC BOD has approved this transaction. We have to find a way to set aside their approval on the grounds that the BOD abandoned their fiduciary duty to IOC's shareholders. At a minimum, we need to delay the effective date of this transaction until we can get Total's attention that they will not be able to steal our assets without a legal fight and may not be able to do so at all. How could we be any worse off if Total & OSH walk on this deal. If the proposed sale is cancelled, Total still has to pay IOC based on the assets to be certified within the next 9 months or so.The one that has the gold makes the rules. In this case, IOC has the gold and the shareholders need to fight the corporate raiders that are trying to steal it.
