IN THE NEWS / Alberta Energy Seeks Antidote To Amber Energy Poison Pill
The Financial Post
Alberta Energy Co. fired a torpedo Friday against hostile takeover target Amber Energy Inc. in an attempt to sink its poison pill.
The Alberta Securities Commission has agreed to hold a hearing on Tuesday to consider an application by AEC to cease trade rights that would separate from Amber's shares if the poison pill is triggered. If successful, the move would render Amber's pill ineffective.
The AEC action follows successful moves by Amber before the commission and the Alberta Court of Queen's Bench to have AEC's offer extended.
Amber, which says the hostile bid is inadequate, wants time to look for a white knight or come up with options to the bid, such as selling assets to keep operating independently.
Amber has been able to extend the expiry date of AEC's offer to Oct. 20 at 7 p.m. local time. The original bid expired Friday.
"We believe that the offer has been outstanding long enough, that they had an opportunity to search for alternatives," said John Watson, AEC's vice-president of finance. "None have come forward to date. And it's time for shareholders to make a decision and vote freely."
AEC wants its bid to go forward and be accepted by shareholders without interference from the pill, Watson said.
"We want to make sure that the offer is able to be accepted."
AEC's offer is conditional on the pill being removed.
Amber has twice delayed triggering the pill. Its board is scheduled to consider a further delay Oct. 14.
While not surprised by AEC's latest manoeuvre, Amber says it will fight it.
The heavy oil and natural gas producer said it's unfair for AEC to ask that its pill be struck down after such a short period of time, when AEC's own poison pill calls for a 90-day period to consider a takeover offer.
"We would never use our shareholders' rights plan just to trash any bid for the company," said Amber president Richard Lewanski. "We would use the shareholders rights plan to make sure we have just enough time to to evaluate all the alternatives."
Under Amber's poison pill, rights, which trade with its common shares, separate after the presentation of a hostile takeover offer.
The rights allow shareholders to buy additional Amber shares at a discounted price, making an unwanted acquisition more expensive.
David Sheridan, a lawyer with the securities commission, said applications to have poison pills removed are common in hostile takeover battles, but decisions often depend on circumstances.
AEC, one of Canada's largest oil exploration and production companies, made an unsolicited cash bid Sept. 15 to take over Amber. The $750-million offer includes the assumption of $304 million in net debt.
AEC is offering $7 a share, or 0.215 of an AEC share, up to a maximum of three million AEC shares.
President and chief executive Gwyn Morgan threatened Thursday to reassess options if Amber initiates more procedural delays.
The company has $750 million in cash riding on the deal in a volatile market, he said.
Lewanski said Amber is not stalling, adding the delays are legitimate.
"The court has ruled that their original offer was unlawful," he said, because option holders did not receive it at the same time as shareholders.
AEC shares (AEC/TSE) closed Friday at $33.85, up 85¢. Amber Energy shares (AMB/TSE) closed at $7.15, up 5¢.
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