MEDIA / Gloves Come Off As Sunoma Turns Up Heat On Orbit Oil & Gas
Saturday, November 29, 1997
The Financial Post
Both sides in the hostile takeover battle for Orbit Oil & Gas Ltd. turned up the heat Friday.
Bidder Sunoma Energy Corp. said Orbit should unlock its shareholders' rights plan if there are better offers in the wings.
Meanwhile, Orbit blasted it for demonstrating poor tactics in not attempting a friendly deal.
Rick MacDermott, president of privately held Sunoma, said his cash bid of $1.70 an Orbit share, for a total value of more than $95 million including net debt, represents "top dollar. "Our offer ... even exceeds our calculation of full and fair value," he said. "We calculated the uppermost value from our research and went beyond that in order to make this a no contest bid."
Orbit should waive its shareholders' rights plan and allow investors to vote on any offers in a timely manner, he added.
No way, said Orbit chairman Bob Lamond. "There's going to be no fire sale over Christmas." Under the plan, Orbit's board can take up to 60 days to seek another deal.
Sunoma, a Calgary-based junior formed last year with capital from U.S.-based energy funds, has grown through the acquisition of Sunalta Energy Inc. and Paloma Petroleum Ltd. It already owns 6.9% of Orbit's shares. The company wants to take over Orbit because of its similar size, focus on natural gas and similar operating style.
But Orbit's Lamond claims his firm's shares are worth more than $2 and has urged shareholders to sit tight until a better offer comes along.
"There is a strong possibility of a white knight and a superior bid," said Orbit's financial adviser, Tom Budd, managing partner, corporate finance, at Griffiths McBurney & Partners. "We had a few phone calls from large U.S. oil and gas producers willing to do a deal, and we had over 12 calls from Canadian companies that have the financial ability to do the deal," Budd said.
"They see greater value than what the deal is."
Budd said Sunoma's hostile bid strategy was poor. Orbit would have been open to a friendly offer at the right price. "It was foolish to not have made a greater attempt," he added. "Since we were already warned that someone might make a bid, we were resigned to the fact we would sell the company." Orbit shares (ORB/TSE) closed unchanged Friday at $1.71. |
