End Game for Phil

[CAC]

At the risk of oversimplifying, my take is that although the Court "raised questions" about whether the deal specifics were reasonable, it did not definiively conclude that they are not.  It was more of a concern that the shareholders who voted "didn't have fair enough information".  The basis for the rejection (i.e. insufficient MS opinion, lack of independent opinion, etc.) are potentially curable by IOC.  Since Hession already showed he will choose financial-gain over morality, and since his public/professional reputation is likely shot regardless of the outcome of this deal, I expect him to try his best to placate the Court and then "re-tee" essentially the same deal.  His ethical sunk-cost will keep him on the same path.  Also, there is little incentive for XOM to voluntarily offer another 500M until/unless they determine that Hession can't get this accomplished on his end. 

So, to me, the key is not the Courts as much as it is the fund managers who voted "yes" the first time around.  Can Phil use all of this publicity to get any of them to change their votes?  XOM likely thinks IOC will eventually "do it right" in the Court's eyes (from a procedural standpoint) and thus eventually get approval.  XOM will likely only feel the deal is truly threatened (and thus feel compeled to consider paying more) if they hear that the shareholders won't approve the re-teed deal.  

[Putncalls]

The sale was not approved. It's dead unless it's appealed AND the Canadian supreme court overturns the Yukon supreme court.

[CAC]

'Putncalls'  The sale was not approved. It's dead unless it's appealed AND the Canadian supreme court overturns the Yukon supreme court. [/quote]

******

Correct, but what's your point?  Hession wants this and XOM wants this.  I think Hession will try to get a better opinion (and attempt to cure other defescts mentioned by the Court) and start over with a new vote on essentially the same terms.  This will all end-up being window dressing unless the funds vote differently next time. 

[Putncalls]

Same terms, same judges and higher oil prices?

[jft310]

One needs to read what Phil said carefully .
Please see the mention of Paradigm Capital . See what they said .
The dissent process is to see transactions are done in Canada at close to Net Asset Value .
Paradigm clearly stated undervalued transaction. They were an independent expert opinion .
So some here need to read and comprehend better.
No deal will proceed unless it's at Net Asset Value , The dissenting shares are still on file and we will demand that valuation and yes that's the way it's done in the Yukon Courts .

[CAC]

Putncalls' -- Same terms, same judges and higher oil prices?

****

But again, the Judges didn't actually rule that the terms were unfair.  They mainly ruled that IOC did not provide their shareholders with enough reliable information in order to allow them to vote "no".  That seems curable by ill-motivated IOC management.  If Hession attempts to solve that problem by getting another more-objective-looking entity to give a fairness opinion; makes sure it is more detailed than the MS report; fully discloses the Hession conflict of interest, etc...and the funds still vote "yes" for the re-teed deal...then I think the Court may conclude that the shareholders have been protected, and "are big-boys", and let it go forward...especially knowing that the dissent process is still available.  The key to leveraging XOM is with the fund managers.  

[2126]

From IOC's last PR, it appears that they are trying to go forward with the same deal with Exxon. IOC will have to have a new vote if the Appellate Court has stated [as Phil has noted] that the shareholders did not have adequate information to make an informed vote. If IOC now moves to have a new fairness opinion and then a new meeting date and vote, there are only 3 ways to stop that deal from going through.

1. Phil [or some other group of shareholders with over 5% of shares] calls for a Special Meeting to remove the BOD. IOC will undoubtedly balk at this request, forcing Phil [or whoever] to return to the Yukon Supreme Court for a court order allowing such a special meeting. [Recall that Phill had to do that to get his propsed resolutions on the ballot for the AGM in June]. At such Special meeting, Phil will need to marshall a LOT of votes to remove the current BOD, most particularly, as CAC has noted, he will need some of the institutional investors on board. With this current Appellate Court decision overturning the Exxon deal, in part due to failed corporate goverance, Phil may be able to do so.

2. Without a Special Meeting, there is nothing to stop IOC from going forward with a new independent fairness opinion. If such fairness opinion concludes that the deal is fair, we are again at square one. Phil would have to return to the Yukon Supreme Court to argue that the new fairness opinion is again inadequate to inform shareholders of the actual value of the IOC assets. In this scenario, IOC has a better chance to prevail, as they will undoubtedly use analysts that are paid a flat fee and who will provide much more detail, but still likely conclude that the deal is fair under current market circumstances. There is no requirement that the IOC sale of its shares be for 'net asset value'. That argument will only apply in a dissent situation. As long a an independent fairness opinion provides sufficient detail to inform shareholders of the fairness of the deal, IOC can likely go forward with a shareholder vote. Of course, Phil could again appeal any Yukon Supreme Court decision that approves the new fairness opinion, but most of his arguments will be countered by IOC's ability to get a satisfactory and independent fairness opinion.

3. Should a fairness opinion be approved by the IOC BOD and, perhaps, the Yukon Supreme and possibly Appeals Court, the deal will go back to a shareholder vote. As CAC has noted, the only way to stop this vote is for a few institutional investors to be on board with a NO vote. Recall that NO votes only need to reach a 33.34% threshold to stop this deal.

The only way another scenario would apply would be if Exxon decides to up the deal, perhaps by removing the 10 tcfe cap. This would be the easiest and least painful route for Exxon, as Exxon will still get paid by Total for any gas over the 10 tcfe cap, thus not requiring any additional cash or shares from Exxon to IOC shareholders. This would also remove at least one of Phil's [and SHU's] main objections to the deal. I would not hold my breath on this, however. Such a move by Exxon, would, however, make it more difficult to find institutional investors willing to vote NO.

One additional note: If the written opinion of the Appeals Court provides that this deal is null, then the dissent votes are also null. This is most likely the case as the Court will have likely based its opinion, in part, on the inadequacy of the fairness opinion in providing sufficient information to shareholders to make an informed vote. A ruling to that effect will require a new fairness opinion AND a new vote, which would require a new time period for dissenting votes. Those who did not dissent from the initial vote will, I believe, have another chance to do so in the next vote.

[davidhmtk]

From IOC's last PR, it appears that they are trying to go forward with the same deal with Exxon. IOC will have to have a new vote if the Appellate Court has stated [as Phil has noted] that the shareholders did not have adequate information to make an informed vote. If IOC now moves to have a new fairness opinion and then a new meeting date and vote, there are only 3 ways to stop that deal from going through.

1. Phil [or some other group of shareholders with over 5% of shares] calls for a Special Meeting to remove the BOD. IOC will undoubtedly balk at this request, forcing Phil [or whoever] to return to the Yukon Supreme Court for a court order allowing such a special meeting. [Recall that Phill had to do that to get his propsed resolutions on the ballot for the AGM in June]. At such Special meeting, Phil will need to marshall a LOT of votes to remove the current BOD, most particularly, as CAC has noted, he will need some of the institutional investors on board. With this current Appellate Court decision overturning the Exxon deal, in part due to failed corporate goverance, Phil may be able to do so.

2. Without a Special Meeting, there is nothing to stop IOC from going forward with a new independent fairness opinion. If such fairness opinion concludes that the deal is fair, we are again at square one. Phil would have to return to the Yukon Supreme Court to argue that the new fairness opinion is again inadequate to inform shareholders of the actual value of the IOC assets. In this scenario, IOC has a better chance to prevail, as they will undoubtedly use analysts that are paid a flat fee and who will provide much more detail, but still likely conclude that the deal is fair under current market circumstances. There is no requirement that the IOC sale of its shares be for 'net asset value'. That argument will only apply in a dissent situation. As long a an independent fairness opinion provides sufficient detail to inform shareholders of the fairness of the deal, IOC can likely go forward with a shareholder vote. Of course, Phil could again appeal any Yukon Supreme Court decision that approves the new fairness opinion, but most of his arguments will be countered by IOC's ability to get a satisfactory and independent fairness opinion.

3. Should a fairness opinion be approved by the IOC BOD and, perhaps, the Yukon Supreme and possibly Appeals Court, the deal will go back to a shareholder vote. As CAC has noted, the only way to stop this vote is for a few institutional investors to be on board with a NO vote. Recall that NO votes only need to reach a 33.34% threshold to stop this deal.

The only way another scenario would apply would be if Exxon decides to up the deal, perhaps by removing the 10 tcfe cap. This would be the easiest and least painful route for Exxon, as Exxon will still get paid by Total for any gas over the 10 tcfe cap, thus not requiring any additional cash or shares from Exxon to IOC shareholders. This would also remove at least one of Phil's [and SHU's] main objections to the deal. I would not hold my breath on this, however. Such a move by Exxon, would, however, make it more difficult to find institutional investors willing to vote NO.

One additional note: If the written opinion of the Appeals Court provides that this deal is null, then the dissent votes are also null. This is most likely the case as the Court will have likely based its opinion, in part, on the inadequacy of the fairness opinion in providing sufficient information to shareholders to make an informed vote. A ruling to that effect will require a new fairness opinion AND a new vote, which would require a new time period for dissenting votes. Those who did not dissent from the initial vote will, I believe, have another chance to do so in the next vote.

XOM could also improve the deal by offering shareholders the choice of a CVR with the 10tcf cap removed and $45 or a flat $60.

[jft310]

My posts is about dissenting shareholders which have the legal right to have the Canadian Courts determine Net Asset Value and a impose that on the deal . To think the dissenting shareholders are going away would be a mistake . We will not give up until we get a deal at Net Asset Value .
The courts already have an independent value by an expert Paradygm Capital who stated the current deal under values the company .
Or their no reason to think this drags out .

[Putncalls]

Even if the CAP was removed, how would a 45$ offer work now that LNG is up ~ 60%?